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Americans are suddenly spending a lot less on auto parts

It doesn't bode well for the economy.

Consumer spending is the engine of the American economy, accounting for roughly 70 percent of all economic activity. And some recent signs suggest the engine could be sputtering a bit.

For example, shares of auto parts retailer O’Reilly Automotive, a national chain with about 4,700 stores, plunged 19 percent after reporting much weaker than expected quarterly same-store sales Wednesday. Auto parts can be a useful lens to look at the behavior of lower-income Americans who make up an important part of their customer base. (At a recent conference, O’Reilly executives described their do-it-yourself customer as “a lower-income consumer who is driven to work on their own cars out of economic necessity.)

These are people who aren’t benefiting much from the booming stock market and rising home prices, because they don’t own stock or houses. So if sales at auto parts stores are slumping, it may indicate that these people are either short of discretionary cash to spend or saving it for a rainy day.

If such grassroots consumers are reluctant to spend, that would be consistent with other signs of softness coming from the American consumer economy. During the first quarter, consumer spending rose at a scant 1.1 percent annual clip, the lowest reading since the second quarter of 2013. Spending on auto and auto parts was down at steep 14.4 percent pace.

And while overall consumer sentiment soared after the U.S. presidential election last year (largely due to cheerful Republicans), that hasn’t yet translated into a surge of consumer spending. The just-released numbers from May showed that while incomes rose, Americans were opting to stuff it into savings rather than spend. That’s not a sign of impending disaster, but it is something to keep an eye on.