Sunday, November 1, 2009
US consumer spending falls
US consumer spending fell for the first time in five months in September. Household spending lowered by $47bn last month which is also due to decrease in income of the US citizens. This news came out after the news of US economic output grew by 3.5%. The growth happened due to the increase in the GDP and pulled the US out of its worst recession. The stimulus packagae helped the economy and there will another federal fiscal stimulus package coming up next spring to help the slow recovery of the economy.
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2 comments:
It seems pretty logical that consumer spending has gone down as a result of lower household incomes decreasing. However, with the holiday season coming up, consumer spending should be helped out,even though kids should still expect less presents under the tree this year. Additionally, the increase in GDP recently is only encouraging if it results in long term prosperity. As we have learned, an increase in GDP from only increasing inputs will not help in the long run. Instead, we need to increase the efficiency of the inputs and economic investment.
This is disheartening considering that increased spending is partly the key to returning to a more normal level of growth. It has been suggested that a savings glut could have been the cause of the recession in the first place. Now, the cause of decreased spending is not that people are saving, but they do not even have the money to save. I guess, we will have to focus on growing in other ways, as mentioned above.
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