So people are spending more and saving less. But is this a bad thing? The increase in spending is a good indicator that consumer confidence is up. And the new rise in consumption could lead us into a self-sustaining recovery. Maybe not so bad after all.
~Cassie
This is only good for a small amount of time, as you are right Cassie confidence in the market is increasing and people see the light at the end of the tunnel. Ideally, the best scenario would be consumers restocking whats being used from their savings and increase saving/investment and eventually interest rates.
ReplyDeleteAt least consumers felt comfortable enough to spend despite the small increase in income. That's important because it is actual spending that is the most important indicator of consumer sentiment about the economy. So the January increase in spending is a small step in the right direction.
ReplyDeleteSpending less is the financially responsible thing to do, despite our economy crawling itself out of the recession. What the economy needs is for consumers to regain their confidence and spend their dollars. If people resort back to saving more and spending less, we can probably kiss chances of a robust recovery in the next few months goodbye.
ReplyDeleteIt’s a good news that consumption level is increasing now compared to several before. On the one hand, People beginning to consume more indicates that they believe that the economy is getting better and they have a high expectation towards recovery. On the other hand, more consumption will lead to more jobs in the market, as companies supply cannot meet consumers’ demand and they will hire more workers to produce more.
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