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Despite decent retail sales data, a look under the hood at consumer spending trends shows continuing weakness. ย In this morning’s note David Rosenberg highlights the weak consumer:

“Strip out utilities, fuels and health care, and the real consumer spending the US was +1.5% at an annual rate in Q3. ย For all the talk about the resilient consumer, this was actually the third weakest quarter on this score since the Great Recession ended in the second quarter of 2009.

The areas that were the weakest were in some of the most discretionary part of the consumer spending pie: jewelry, sports and recreation vehicles, appliances, casinos, restaurants and hotels, and nonessential medical services.

So for all the talk about how the consumer is hanging in, especially the high-end, and that the sentiment data reports are out of whack with reality, when you actually dig through and see what people were spending money on in the quarter, it was largely in the essentials and they ran down their savings rates just to meet these needs during the quarter.”

Source: Gluskin Sheff

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