A Slowdown That Could Surprise He cites already slowing consumer spending as a sign of a reverse wealth effect unfolding right now. Combine that with higher oil prices, which also drag down consumer spending, and with higher interest rates, and you have a recipe for a slowdown that might surprise people. Say stocks continue to trend lower on earnings disappointments, a larger than expected oil price shock, whatever. The market's slide leads frustrated investors to trim back their spending. Earnings growth slows as well.
Job creation slows.
ISI sees signs that the poverty effect is already in motion. Based on the firm's proprietary survey of companies, not only are auto, chemical, manufacturing and retail companies seeing a slowdown, but so are technology companies. ISI's survey of nine large and diversified Fortune 500 technology companies was completed last week. The decline was primarily due to slower revenue growth from PC manufacturers in our survey. What might happen next to the market and the economy depends on a bunch of imponderables.