Consumers are once again being mindful of their money and the economy. Although their income is steady, spending has declined.
This isn’t the first time Economists noticed a decline in spending. Since the Great Recession, spending has gone up and down just as the market. Nothing has remained steady, including the financial outlook and optimism of customers.
“An earlier government report showed that retail sales rose slightly in April, as strong car sales and spending on building supplies helped make up for weakness in other sectors. Friday’s report doesn’t break down how consumers are spending money, just how much money they are spending, saving or paying in taxes.”
Economists forecasted a 0.1% rise in the economy, but the report released on Friday showed spending fell 0.2% when adjusted for inflation. The results were disappointing since consumer spending accounts for roughly two-thirds of the economy. In order for the economy to see growth while the unemployment rate drops, we must see a 3% increase in consumer spending.
During 2Q12, Economists also forecasted an increase only to once again be disappointed by the results of consumer spending. The prediction was a result from a rise in income.
Have consumers changed their focus? It seems that is the case since consumers have been cautious about using credit cards and more eager to build a saving account. Credit card debt fell $1.7 billion to $846 billion. That’s 17.2% below the peak of $1.022 trillion set in July 2008, during the Great Recession.
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Bahiyah Shabazz is one of the nation’s leading financial experts on the art of maximizing growth, entrepreneur, personal wealth expert, and author of “Spending fast: Clean up your finances in 5 days” and “Finances are linked to emotions: live within your means”. Bahiyah Shabazz is also a motivational speaker, columnist, and radio host. If you have questions or topic suggestions please email: contact@BahiyahShabazz.com.