Saturday, April 10, 2010
The Well-Off Are Spending Again — but Carefully
This is good news to hear, that the wealthy are starting to spend their money again. This could be the beginning of a recovery? Some experts contend that much of the high-end spending before the recession was fueled by money borrowed by people who were trying to live beyond their means. Today there is a trend to reducing risk by cutting debt. But even people who came out of the financial crisis relatively unscathed are pulling back. The possibility of losing their wealth has become more real.
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It's a very good sign that the wealthy are starting to spend again, but yet are still wary about what they buy. This shows an increase in consumption. There used to be a trend of people living beyond their means, now they aren't embarassed by watching costs.
ReplyDeleteSpending or consumtion in economic terms is really an important part of GDP. Over the last year and a half all the money that was bailed out was to induce people to start spending again. It's definetly a good news that people are getting back the confidence they used to have before the recession. Now consumption being a fucntion of the dispoable income ensures that people's spending will cause the economy to flow again. Hopefully this a beam of light at the end of the tunnel.
ReplyDeleteIt is might be true that the increasing spending is actually caused by borrowing money. However, in my opinion, it is still a good sign, since people, at least, regain their confidence to consume, and it also confirms that they will have the ability to repay their debts. And as a matter of fact, spending is always a crucial part of GDP. Therefore, after all, I think this is a good sign.
ReplyDeleteClearly, it is a positive sign that the wealthy are starting to spend again. Consumption will rise, which will cause GDP to rise. Hopefully this means that with people starting to spend, the economy wil finally stabilize.
ReplyDeletewith the wealthy starting to fuel the market a bit with their spending, we expect that the market has some signs of staying stable. With the wealthy doing the spending the government should look at how they will tax these people because if you start to slap them with higher taxes there could be a change, and people could go back to saving.
ReplyDeleteIt's good that the wealthy are spending again, but it will be interesting to see if that changes with rising taxes and health care reform. Having to pay huge portions of their income to the government may deter any recent increase in consumption.
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