Research

To understand consumer spending, look at the very small businesses

A recent analysis by WAIN Street demonstrates the predictive power of very small business credit performance for consumer spending. 

Quarterly ratio-detrended WAIN Street Business Default Index

The E20 BDX sub-index that tracks the performance of businesses with fewer than twenty employees is a good predictor of headline Personal Consumption Expenditures (PCE) and expenditures that require a more deliberate change such as on Food and Transportation.  The Solo BDX sub-index that tracks the performance of sole proprietors is a good predictor of expenditures that consumers can control with greater ease and immediacy such as on small ticket durable goods and financial services.

Incorporating BDX data into analysis improves market surveillance capabilities and provides early warnings of changes in consumer spending.

The complete report is available here: Forecasting Consumer Spending.