Slow Growth In Consumer Spending, Cities Concerned?

Research shows that consumers’ everyday spending on most goods and services in 15 major U.S. metropolitan areas has slowed dramatically, from 5% in the second quarter of 2014 to 0.5% in the comparable period in 2015.

WHAT ARE THE IMPLICATIONS FOR CITIES?

Although the study is limited to the spending characteristics of one bank’s customers in only 15 metropolitan areas, this data offers a canary in the coal mine-type of insight into the health of the largest segment of our economy, consumer spending, which makes up nearly 70% of the United States’ gross domestic product. The cities studied account for 32% of retail sales nationwide; therefore, statistically-speaking, this data of local consumer commercial conditions can be predictably applied on a broad macroeconomic scale. Does the data suggest that growth is slowing in cities across the country? Yes, the post-recession rate of growth since late 2012 has lagged similar post-recessionary periods.

The data may suggest that the expansion in business growth that has fueled the growth of cities and neighborhoods over the past 5 years may face pressures going forward. Namely, a ceiling may be approaching that could limit new construction of mixed-use commercial developments and rehabilitating empty building stock. However, the data also suggests that businesses that sell food and cater to a young population may fare better than traditional retail establishments, provided unemployment remains low. The team at the JP Morgan Chase Institute plan to update this data set in the future, and it would be wise to pay close attention as to whether the deceleration of consumer spending continues.

To access the full report: [url=null]https://www.jpmorganchase.com/corporate/institute/document/jpmc-institute-local-commerce-report.pdf[/url]

Photo Credit: [url=www.city-data.com]www.city-data.com[/url]