by Calculated Risk on 11/26/2008 06:24:00 PM

First, look at these three comments on consumer spending:

From the WSJ: Data Indicate Faltering Demand

Spending is declining in the consumer and capital sectors, as demand for expensive goods took its biggest spill in two years in October and consumption dropped at the sharpest rate in seven years.

From Professor Roubini wrote:

Another batch of worse than awful news greeted today Americans getting ready for the Thanksgiving holiday: free falling consumption spending, collapsing new homes sales, falling consumer confidence, very high initial claims for unemployment benefits, collapsing orders for durable goods.

And from Bloomberg: Consumer Spending in U.S. Falls 1%, Most in 7 Years

Spending by U.S. consumers dropped in October by the most since the 2001 contraction, signaling the economy is sinking into a deeper recession.
...
The biggest consumer spending slump in three decades is likely to persist as home prices fall and job losses mount, threatening the holiday sales outlook ...

emphasis added

Sounds pretty bad, and the numbers from the BEA were definitely ugly - but the numbers were slightly better than I expected. The monthly data is pretty noisy and may be revised significantly, but the reported numbers showed a 3.9% annualized real decline in personal consumption expenditures (PCE) from July to October (the period that matters for GDP), and that was somewhat better than 4.5% to 5.0% decline I was expecting. This is just one month of 4th quarter data - and PCE could get revised or decline more in November and December - but this suggests the more dire predictions (worse than 5% annualized real GDP decline) for Q4 GDP might be excessive.

Hey, a 5% annualized decline in real GDP is bad enough!