Hale Bonddad Stewart

In the first quarter of 2008, personal spending on durable goods decreased
by 6.1% and personal spending on nondurable goods decreased by 1.3%. The only
area of personal spending to increase was services, which increased 3.4%.

In other words, in the first quarter of 2008, people were buying less
"stuff". And it's not just a decrease in one category but both
categories of physical goods that raises my concern.

Going forward the key variable to watch will be job growth. Declining job
growth means declining income, lowering confidence and thereby decreasing
spending further.

All of this also means that if this trend continues (declining job growth
leading to declining wages leading to declining sentiment leading to lower
spending) the second half of this year might have some ugly surprises in store
for us.

Reuters - The economy likely shed more jobs in April as the economy
continued to weaken against the backdrop of a deeper deterioration in the
housing market and a growing credit crunch.

Economists polled by Reuters ahead of the Labor Department report to be
released on Friday at 8:30 a.m. EDT have forecast that the economy lost 80,000
jobs after losing the same amount a month earlier.

[excerpt]

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