A Tale of Two Headlines--Consumer Spending Slowed in Sept., while Manufacturing Nearly Stalled in Oct.

I'm just going to throw these two headlines out for you to consider Both are from MSNBC News:

Consumers slowed spending in September;

WASHINGTON - Consumers, battered by a steep downturn in housing and a severe credit crunch, slowed spending growth in September to the weakest performance in three months.

The Commerce Department reported Thursday that consumer spending rose by 0.3 percent in September, slightly lower than the 0.4 percent increase that analysts had been expecting. Incomes grew by 0.4 percent, matching the August gain, and in line with analysts’ forecasts.

Economists are worried that consumers, the main support for the economy, may cut back on their visits to the malls in coming months as they struggle with the housing slowdown, tighter credit and now record-high oil prices.

And here's the second MSNBC News story:

Manufacturing growth nearly stalled in October;

NEW YORK - Growth at factories deteriorated to its slowest pace since March as tighter credit conditions and a housing downturn proved a drag on production, according to a report released on Thursday.

The Institute for Supply Management said its index of U.S. manufacturing fell to 50.9 from 52.0 in September, below forecasts for around 51.5. A reading of 50 separates growth from contraction.

[....]

The ISM data raised fears the central bank’s cumulative 3/4-percentage point reduction in rates thus far might not be enough, prompting investors to buy bonds and push market interest rates lower.

“It does appear that the impact of the slowdown in the financial, housing and transportation segments has spilled over into manufacturing with the exception being continued strength in new export orders,” ISM said in its report.

The survey’s production index dipped into recessionary territory, diving five points to 49.6.

Preventing a further drop was a spike in exports, which have received a strong boost from the dollar’s vertiginous decline.

If it wasn't for the spike in U.S. exports, then we can pretty much guess that manufacturing would have stalled, or perhaps even contracted. But again, we come to the question of what will happen in the U.S. economy if consumers are tapped out on spending, and manufacturers see the demand for U.S. exports start to drop? Keep a close watch on consumer spending. Because if consumer spending continues to slow down, due to the high energy costs, housing mess, and credit crunch, then you can bet that consumers will not be able to spend their way out of a possible recession.