Considering that consumer spending represents about 70% of the economy, this isn't good news.
New York Times:
As the weak economy has trudged on, they have leaned on credit cards to pay for holiday gifts, many bought at discounts. They are dipping into savings to cover spikes in gas, food and rent. They are substituting domestic vacations for international trips, squeezing more life out of their washing machines and refrigerators and switching to alternatives as meat prices have risen.
That leaves little room for a big increase in spending in 2012, economists say, a shaky foundation for the most important pillar of the American economy.
"The consumer is far from healthy," said Steve Blitz, senior economist for ITG Investment Research.
Even the seemingly robust holiday shopping season is raising concern. After a strong start on Thanksgiving weekend, a pronounced lull followed, causing retailers to mark down products heavily in the week before Christmas. While final numbers for the season are not in, analysts say they are worried that retailers had to eat into profits to generate high revenues.
The reasons for the sluggishness are legion, but basically, Americans have no confidence that things are going to get any better:
For consumers, the reasons for the sluggishness are clear: incomes are essentially flat, job growth is modest, and more than 40 percent of the new jobs in the last two years have been in low-paying sectors like retail and hospitality.
While consumer spending is not "going to collapse," said Joel Prakken, senior managing director at Macroeconomic Advisers, "there are some headwinds there."
Several indicators - credit card debt, mortgage delinquencies, and housing sales - all point to the conclusion that consumers are tapped out and any new spending will be delayed or reduced while past debts are payed off.
If Obama was hoping for a consumer spending binge to heat up the economy, he better look elsewhere for salvation from the sluggish growth his policies have caused.