Personal Consumption Expenditures

Chart of the Week for August 13-19, 2004

In addition to the news of increased oil prices, heightened terrorism alerts, and unusually low hiring, personal consumption was reported at a low not seen since 1986 (adjusting for September 11th). Some analysts were caught off guard by this report and are mixed about whether this is an anomaly or an indication of a slowdown in growth. A decline in motor vehicle sales was attributed for much of the drop. All of these concerns, along with the ongoing Iraq conflict and an uncertain presidential election, brought domestic equity markets to 2004 lows last week and the 10-year Treasury Note yields fell to 4.21%. Some analysts believe that markets and the economy will rebound gradually while others say this is a much needed correction.

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