U.S. consumer spending in December weakest since 2009

(Reuters) - U.S. consumer spending recorded its biggest decline since late 2009 in December with households saving the extra cash from cheaper gasoline. 

Other data on Monday showed factory activity cooled in January, suggesting the economy may have entered the new year on a slightly softer footing than had been expected. 

The Fed has repeatedly said it viewed the oil-driven decline in inflation as transitory and expected inflation to move back to its target. 

"The concern is that falling oil prices combined with a strong dollar, which pushes down the price of imports, could move inflation even lower, which could dampen overall economic activity," said Diane Swonk, chief economist at Mesirow Financial in Chicago. 

"Outright deflation seems unlikely, especially in light of better labor market conditions."

DYI Comments:  The reason oil has dropped in price is from a lack of demand as world economies struggle for growth.  Sure enough our fracking has increased oil supplies but it is also very dependent high oil prices and ultra cheap financing.  With both of those escaping the amount of fracking will be muted.  In the end oil will continue on its secular track of higher oil prices.  In the meantime many nations in the world have fallen into recession as more and more countries growth goes negative the U.S. will have strong headwinds.  It has been a long time since the economy bottomed out in 2009, historically we are long in the tooth providing a backdrop for recession in 2015.

DYI