Are You Going to Buy ALL of That? Maybe, Not
If you decided to put off purchasing a new computer to compliment your phone upgrade, you are not alone.
According to figures released by the Commerce Department, consumer spending in September rose just 0.2 percent after a 0.7 percent increase in August. Additionally, incomes dropped for the first time in almost a two year period.
The low spending numbers match consumer expectations of a stagnant economy. If you're not sure what tomorrow may bring, you'll hold off on some of your purchases. According to Bloomberg News, this outlook will hurt sales retailers like Best Buy and Target.
The roller coaster stock market, lack of job growth, and little to not growth in wages has shaken confidence that the recovery that began in 2009 might not continue. President Obama and the Federal Reserve have taken steps to prevent another recession.
The Fed has plans to replace some notes in their portfolio with longer-term Treasuries to further reduce borrowing costs.
Earlier, President Obama announced a $447 billion job creation plan and then began promoting it aggressively throughout the country, urging voters to demand actions from their Congressional representatives. In Denver on Sept. 27, the president reminded the nation that jobs and economic growth "comes down to choices and it comes down to priorities".
A sentiment echoed by retailers.
“The consumer is making very measured choices,” Bloomberg quoted Best Buy Chief Executive Officer Brian Dunn from Sept. 13 a telephone interview after the company reported a 30 percent decline in second-quarter profit . “I don’t think it’s a year where someone is going to buy a TV and a tablet and a new smartphone and go to Disneyland.”
Still, the Thomson Reuters/University of Michigan final index of consumer sentiment rose to 59.4 from an an almost three year low in August. And, while there were no employment gains, unemployment managed to hold at 9.1 percent.
Though still hoping for action from their political leaders, consumers in the U.S. seem to have decided to focus on their own budgets. Thus, goods will still be purchased, maybe just not as many.