With the release of the latest GDP report, the possibility of a consumer lead recession just increased.

First, before today's GDP report there was a series of charts that caused me great concern. Here they are in the appropriate order.

Year over year job growth has been deteriorating for some time. This has lead to

declining real income. As a result

Consumer confidence is dropping, as is

Consumer sentiment. Therefore

Personal Consumption Expenditures are dropping

This is not a new situation. Retail sales have been soft for the last few years

And the year over year change is now negative

Now we have two new key pieces of data from the latest GDP report.

In the first quarter of 2008, personal spending on durable goods decreased by 6.1% and personal spending on nondurable goods decreased by 1.3%. The only area of personal spending to increase was services, which increased 3.4%.

In other words, in the first quarter of 2008, people were buying less "stuff". And it's not just a decrease in one category but both categories of physical goods that raises my concern.

Going forward the key variable to watch will be job growth. Declining job growth means declining income, lowering confidence and thereby decreasing spending further.

All of this also means that if this trend continues (declining job growth leading to declining wages leading to declining sentiment leading to lower spending) the second half of this year might have some ugly surprises in store for us.