Bernanke made it clear that GDP, unemployment and inflation are the Big Three numbers he’s watching when it comes to whether it will step off the bond-buying gas, but consumer spending is something the central bank — and the market — will no doubt be keeping tabs on too.
That’s because we’ve got a consumption-driven economy, with consumer spending accounting for about 70% of all economic activity. True, a big chunk of that comes from healthcare and other less-than-discretionary spending, but a good 35% still comes from retail sales alone.
Higher home prices, a thawing job market and debt reduction helped consumer spending pick up in the first few months of 2013, but then it went negative for the first time in almost a year. The Fed will be watching this end-of-the-month report to see if the economy is ready to stand on its own two feet.