Nomura Securities U.S. Economic Weekly: Recovery Has Underperformed
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Nomura Securities U.S. Economic Weekly by David Resler
Resler said, "The US recovery has underperformed, leading to lower growth expectations. We find that a structural shift in household spending patterns explains at least some of the weakness. Since 1929, inflation-adjusted personal spending on services has grown by an average 3.3%/year. Spending on services fell in 2009 for the first time since 1938, declining by 1.4%. And, more than two years into the recovery, growth in spending on services has yet to fully recover, increasing by 0.9% in 2010 and by an annualized 1.6% thus far in 2011. In our view, the disruption in the housing cycle has caused this structural shift in spending behavior. Though lower mortgage rates have failed thus far to lift home sales off a multi-year bottom, should the Fed’s latest round of support for the housing market prove successful the result would no doubt provide a much needed lift to personal spending."
Resler said, "The US recovery has underperformed, leading to lower growth expectations. We find that a structural shift in household spending patterns explains at least some of the weakness. Since 1929, inflation-adjusted personal spending on services has grown by an average 3.3%/year. Spending on services fell in 2009 for the first time since 1938, declining by 1.4%. And, more than two years into the recovery, growth in spending on services has yet to fully recover, increasing by 0.9% in 2010 and by an annualized 1.6% thus far in 2011. In our view, the disruption in the housing cycle has caused this structural shift in spending behavior. Though lower mortgage rates have failed thus far to lift home sales off a multi-year bottom, should the Fed’s latest round of support for the housing market prove successful the result would no doubt provide a much needed lift to personal spending."
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