Consumer Spending Data for March
Preferred Financial Services, Inc reviews and discusses the most recent consumer spending habits released by the Commerce Department ….
Andover, Massachusetts May 18th 2010—Preferred Financial Services has read and reviewed the most recent consumer date released by the Commerce Department and sees some interesting trends in consumer behavior. The economy is still limiting consumer spending, but there has been a marked improvement compared to the past few quarters. While spending is increasing, wages are not keeping track and the national savings rate is starting to decline again. All of this means that we are seeing a new but perhaps familiar type of consumer decision making when it comes to spending, saving, and household debt.
The newest data released for the month of March shows a very different outlook on household finances than what we had come to expect throughout the recession. Consumer saving, spending, and incomes all changed to various degrees. The most important part of the US economy is consumer consumption, so the .6% rise in consumer spending is good news for the future of our economy. However, this good news was offset by some equally troubling news. This .6% rise in spending was counteracted by a .3% drop in personal savings. This drop has left the personal savings rate at 2.7% of net household income, the lowest it has been since September of 2008. The savings rate climbed throughout 2009 to a high of 4.3% as Americans stockpiled their earnings and prepared for a prolonged recessions. This recent drop in saving shows that the increase in spending can be partly attributed to people spending more of their after tax income and saving less. While good for short term economic news, this troubling trend indicates that while the economy and stock market have both improved over the past few quarters, the bad financial decisions and habits that led us to this recession appear to be making a comeback.
From an income standpoint the news is even worse. Personal income grew a miniscule .3% rise last month, not keeping pace with spending or inflation. As it is less than the rise in consumer spending, this too indicates consumers are trending back towards their pre-recession habits of spending more than they should. This small rise in incomes also indicates the job market has a ways to go before it can recover fully. High unemployment will keep wage growth low as there is an oversupply of skilled labor which will stifle growth in the long term and limit our ability to return to pre-recession levels of spending, earning, and living. What can be said with 100% certainty is that as long as the job market remains in a slump, the US economy can not realize its full potential and lead a global recovery.
Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
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Contact:
Stephan Tavernini
Citation:
http://finance.yahoo.com/news/Consumer-spending-advances-apf-134515370.html?x=0 by Martin Crutsinger, AP Economics Writer
