Bloom Off the Rose

American consumers are finally doing what people do when prices spiral and wages stagnate. They're cutting back. The Commerce Dept. says there's been a sharp pullback in consumer spending. Many economists thought this would happen sooner. Yet the numbers tell us the pullback, though late, has been sharp, and it has consequences for the broader economy.

For most Americans, the numbers may not mean much. Consumer spending is rising at a rate about one third what it was two years ago. This is a function of hikes in the price of gas, transportation, and housing. So it should come as no surprise that non essentials are the first on the household budget chopping block.

The economists call this discretionary spending. Do you go out to eat three, maybe four times a week? Maybe you cut back to once or twice. You hold off buying that iPod for yourself or a loved one. Trips in the car that don't involve work get fewer and fewer. And nobody tells you much of this wouldn't be a problem if you got a raise. They don't tell you because they know your boss isn't planning on giving you one.

It seems like a dim memory back in 2001 and 2002, when President Bush urged America to spend, spend, spend as a way to tell the world we'd gotten over terrorism. He never told us that in the last year of his presidency we'd see both government and the private sector pick our pockets. Now, finally, consumers are getting wise.

It's not going to be pretty.