Thursday, September 2, 2010
Increase in Spending on US Autos
In the month of August consumer spending on Automobiles was the highest its been in years. This led to an overall increase of consumer spending in the economy, which economists see as hopeful. Economists had expected Consumers to spend much less because of unemployment and underemployment. Saving rates are still low, but much higher than they were in the 2007 recession and were about what economists expected. Although increased spending is greater than expected, growth in the economy has still been too slow to account for job growth and we could we are no where near out of the woods on this recession. If saving rates don't start rising, we could slip back into recession.
Subscribe to:
Post Comments (Atom)
2 comments:
People are placing their money back into the economy which is good. Yes, they are spending money which they could be saving but at the same time, after a recession it is mandatory to have cash pumped back into the economy and what better way to do so than through the consumers verse having the government intervention. This increase can also be attributed to the mass savings on cars at this time as car producers want to sell as much as they can as they lower the prices for the consumers. Also the newer cars have better gas milage which allows for consumers to save money also in the long run.
I agree that the increase in auto sales can be contributed to the massive price cuts from auto companies recently. However, another reason for the increased auto sales in my opinion is that because consumers are seeing interest rates going up, they want to lock in to today's low rates for their large purchases such as automobiles. Furthermore, I agree that if we don't see interest rats start rising it could hurt the economy. If the Fed announces interest rates to rise, consumers are more inclined to take out large loans now and pump money into the economy.
Post a Comment