Posted by
Conrado Brenna on Friday, June 26, 2009 8:35:47 PM
Very gradual
increases in the consumer spending rates have been seen, with a 0.3 percent
increase in May. The Obama administration’s stimulus plans have spurred a small
gain in American incomes, a rather optimistic sign that the process of getting
the economy back in its track is paying off. The 0.3 percent increase mentioned
before was the first gain in the past three months. Earnings have also risen by
1.4 percent, the biggest gain in a whole year. All of this events have led to
the 15-year high savings rate. The consumer sentiment rose in June to its
highest level since February 2008. All of the efforts done by the government to
get credit working back and lift the incomes are allowing consumers to spend
while the unemployment rate rises. In fact, the unemployment rate hasn’t been
this high even since the 1980s. The destruction of wealth caused by the housing
downturn has led to the present high savings rate. As Michael Feroli put it,
“It’s still too early to look for consumers to be an engine of growth for the
economy”. Signs for the future? While a 10 percent unemployment rate is
expected nationwide, the average household is to save every penny it has to
survive the rollercoaster path of the economy, by making smaller purchases,
more conservative investments and only purchasing what it needs- not what it
wants.