'08 Top Economist Says Consumer Will Be Back

Joel Naroff, who was named the top economic forecaster in 2008 by Bloomberg Business News, thinks the modest recent increase in consumer spending will continue, and grow stronger in the fall.

“It’s not that there is going to be a huge growth in income, or jobs are going to start growing,” Naroff tells Forbes.com. “It’s just that an awful lot of people were so fearful about the future that that they were spending as if they’d already lost their jobs, even if they had jobs.”

While more spending means a drop in savings, Naroff “doesn’t see Americans going back to their debt-laden ways anytime soon,” writes Forbes’ David Serchuk.

That’s in part by necessity, because homeowners won’t be able to cash in their home’s value and spend the equity, as they could during the housing bubble. “The savings rate was 4.6% in June, 6.2% in May,” writes Serchuk, “and [Naroff] projects it to range from 5.5% to 6% in the immediate future. When spending kicks in, he projects that rate could go down to 4%, which is a generous increase in spending, without the ‘consumer going crazy,’ he says.”

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