Tuesday, August 31, 2010
Consumer spending picks up
Although the consumer spending increased in the month of July, it is not a large enough increase to suggest consumer confidence has been regained in the market. As the article states, the increase was "modest". While this does reflect the direction in which we hope the consumer spending will grow, it does not necessarily mean it will continue. The savings rate decreased, however it still remains at a historical high suggesting that consumers are still not fully confident about the recovery of the economy.
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Tim,
ReplyDeleteI can understand how consumers might be hesitant to spend as the country is still mired in a time of economic troubles. This sentiment, however, also prevents the economy from achieving higher levels of growth. Consumers share a degree of caution and extreme sensitivity that makes them so easily effected by fluctuations in economic indicators. If consumers weren't always so worried about constant media reports on the state of the economy, spending could exist at a more stable and consistent level. Economic growth would not slow down so quickly, and it would take incredibly huge booms and busts to create real change in the economy. This condition seems much too farfetched though, because the human economy is based on the fickle consumer.
I like your comment Anthony,it really reflects the situation. I would like to add that our current state is a lag after all the stimulus package. Everything is moving slowly into places, and I think one of the reason for this is the size of the package, it's too small compared to the whole American market.
ReplyDeleteI think that the slight rise in consumer spending in July was due to the "back to school" spending that most people have to do every year. The bulk of the stimulus package has yet to be spent. According to recovery.org, only 214.82 billion has been spent out of the 787 billion.
ReplyDeleteIf one considers back to school spending a big part of the increase in consumption, then with the holiday season coming up, consumer spending is likely to increase further!
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