In this article Richard Curtin explains that “The Sentiment Index has been
higher during the first eight months of 2017 than in any year
since 2000,
which was the peak year of the longest expansion in U.S. history.” Overall
2017 has had a higher consumption rate than the previous years. Consumption
has increased and has changed GDP as well. The consumer sentiment index
rose to 96.8 in August from a final reading of 93.4 the month before.This capitalized August, meaning that the consumption rate is continually increasing over the entire year of 2017. Hurricane Harvey occurred too late for the survey, which could change the continuous consumption increasing rate.
The rise in consumption can be due to the fact that consumers are
optimistic about their personal financial conditions. Consumers optimism
about their personal financial conditions can be a big factor for computing
the overall consumption level. If consumers feel that they have more disposable income than they would be more likely to spend more money than they did before.This increase of consumption can be fueled by low levels of unemployment and changes in inflation and interest rates.These factors might affect the consumption in more expensive items like cars and diamonds. People will be more likely to spend their income because they have little incentive to save.
which was the peak year of the longest expansion in U.S. history.” Overall
2017 has had a higher consumption rate than the previous years. Consumption
has increased and has changed GDP as well. The consumer sentiment index
rose to 96.8 in August from a final reading of 93.4 the month before.This capitalized August, meaning that the consumption rate is continually increasing over the entire year of 2017. Hurricane Harvey occurred too late for the survey, which could change the continuous consumption increasing rate.
The rise in consumption can be due to the fact that consumers are
optimistic about their personal financial conditions. Consumers optimism
about their personal financial conditions can be a big factor for computing
the overall consumption level. If consumers feel that they have more disposable income than they would be more likely to spend more money than they did before.This increase of consumption can be fueled by low levels of unemployment and changes in inflation and interest rates.These factors might affect the consumption in more expensive items like cars and diamonds. People will be more likely to spend their income because they have little incentive to save.
Good stuff, stock exchange booms may also be a factor.
ReplyDeleteThere has also been a steady decline in nondurable goods. Possibly indicating consumers are more comfortable making larger, longer term purchases.
ReplyDeletehttps://www.bls.gov/emp/ep_table_404.htm
Very solid real life example of the material we've been covering in class on MPC and the macroeconomic effect of it on GDP. I would enjoy finding out more on the Sentiment Index and if it is any more telling of GDP related information or just an indicator of consumption rate.
ReplyDeleteThis is a very good sign for our economy as a whole. It will be interesting to see how the two hurricanes impact consumption in the southern states. On one hand, consumption could decrease because of the decrease in tourism and spending from tourism. On the other hand, consumption could see a bump from spending on construction to rebuild.
ReplyDeleteAccording to William Dudley, the President of the New York Federal Reserve, the hurricanes, though obviously unfortunate, will result in an overall boost to the economy. Due to all of the damage caused by the storms, consumption will rise from the rebuilding effort. While you are likely correct that there will be a decrease in tourism, the costs from construction and rebuilding will boost consumption and the economy as a whole.
ReplyDeletehttp://www.marketwatch.com/story/feds-dudley-says-hurricanes-harvey-irma-to-give-unfortunate-boost-to-us-economy-2017-09-08