One of the biggest concerns we hear from investors is that weak consumer spending will undercut the overall economic recovery. After all, they argue, from 1982 to 2006 the consumer drove the economy, with consumption rising faster than income and a steady drop in the saving rate.rnWe agree that the consumer will slow down and consumption will lag income growth. However, we disagree that consumer spending is about to go off the rails dragging the rest of the economy with it.rnWhile there have been periods of unusually strong consumption over the last 25 years, the overall contribution of consumption to U.S. GDP growth has been moderate. Thus, from 2001 to 2005, fueled by easy credit and booming asset prices, annual consumer spending rose 1.2% faster than income. However, for the period 1982 to 2006 as a whole, nominal consumer spending grew an average of 6.4%, compared to 6.0% growth in personal income. That 0.4% gap is a nice push for overall growth in the economy, but we think it is hardly the crazy train that some commentators point to.
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