U.S. consumers are having to spend more to cover the rising costs of basic fees such as rent and utilities. Today, the Commerce Department reported that household spending rose by 0.4% compared to 0.2% in July. This continued increase indicates the effects of inflation within the U.S. economy. The PCE price index, which omits volatile food and energy costs reported a 4.9% year-over-year increase this month. U.S. stocks have dipped after the release of these consumption and inflation figures.
The labor market has aided in households' ability to retain some purchasing power in spite of inflation. Employers continue to seek more workers which has resulted in low unemployment and firings in the economy. With that being said KPMG chief economist Diane Swonk stated that consumers should spend "on what they have to", citing the importance of purchasing "necessities, not niceties."
The personal saving rate this month was 3.5% for the second month in a row. Last year, this estimate was 9.5% for August of 2021. This again reflects the growing effects of inflation as households are unable to commit as much of their wages to savings. Many economists are forecasting a recession in 2023 due to such declines in the economy.
https://www.wsj.com/articles/inflation-consumer-spending-personal-income-august-2022-11664484435
Households have definitely taken a tremendous hit due to inflation rates as of late, and also consumer spending. It's certainly a tough time for Americans and I do not like to see that the monthly saving percentage is falling, and falling fast at that.
ReplyDeleteHopefully the predicted recession is only a warning from economists to create a change in the economy. There will be a stable solution to the problem and it should be found before 2023.
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