Earnings season continued to chug along this week, despite the major equity indices still limping along after several brutal dips last week. One of the biggest disappointments of the session was Michael Kors (KORS) which serves as a gauge for the spending habits of the upper-middle-class consumer. KORS beat EPS expectations by $0.10 as well as posting revenues higher than forecasted. Management guided Q2 EPS and revenues below consensus estimate; however, they raised FY15 EPS and revenues above consensus. The stock spiked higher initially, following the earnings release, but then retreated from its pre-market gain rather quickly. Regardless, the company anticipates that sales will be robust going into the holiday season, and some consumer data indicates that this may be a decent possibility.

The major equity indices are continuing their dyslexic movements today; presently hovering around flat returns for the session. A substantial lack of economic releases has not done the market any favor. However, Gallup’s July reading for average daily consumer spending ought to give some hope to a worrisome economy. In July, the American consumer reported of daily spending averaged $94; slightly higher than the $91 reported in June, but below the $98 in May. However, spending improved nicely over last year when the average spending was $89 in July 2013. Below is a chart of the average monthly-spending since 2008, and although the levels are recovering, we still aren’t back to pre-recession levels. The survey is meant to measure the total amount that consumers spent “yesterday” in stores, gas stations, restaurants, on the internet, etc., but the reading does not include big purchases (like vehicles) or monthly bills.

As we’ve noted numerous times, consumer spending is vital to the U.S. economy. For some context, consumption accounts for about 70% of all U.S. economic output and a huge portion of the gross domestic product (GDP). Although you can see small changes in the month-to-month averages reported by Gallup in the chart, the broader trend (beginning around 2012) has been a steady incline of consumer spending, which ought to help fuel an economic recovery going forward.