Consumer Confidential: Less income, more recession, free pancakes
-- No, you're not mistaken: You're now a little poorer. Americans earned less last month, the first decline in nearly two years. At the same time, though, we spent a bit more in August despite seeing our incomes drop 0.1%, according to the Commerce Department. Consumer spending rose just 0.2%, after a more robust 0.7% gain in July. Most of the increase in spending went to pay higher prices for food and gas. When adjusted for inflation, consumer spending was flat last month. Many tapped their savings to cover the steeper costs. In August, the savings rate fell to its lowest level since December 2009.
-- And things may be about to get even worse. The U.S. economy is staring down another recession, according to a forecast from the Economic Cycle Research Institute. "It's either just begun, or it's right in front of us," says Lakshman Achuthan, managing director of ECRI. "But at this point that's a detail. The critical news is there's no turning back. We are going to have a new recession." Jeepers. The ECRI produces widely followed leading indicators which predict when the economy is moving between recession and expansion. Achuthan says all those indicators are now pointing to a new economic downturn in the immediate future.
-- On the bright side: Our friends at IHOP say that participating restaurants nationwide will serve up a free Scary Face Pancake giveaway for kids 12 and under on Friday, Oct. 28, from 7 a.m. to 10 p.m. (one per child). Parents can sign up on IHOP's website for a wake-up call on Oct. 28 from "Count Spatula" with a reminder about the free Scary Face Pancake giveaway. So things could be worse, I guess.
-- David Lazarus
Photo: Pancakes, anyone? Credit: L.A. Times file photo