Spending More, Earning Less

Spending More, Earning Less

Accounting for seventy percent of our economy, household spending climbed 0.2 percent in January of this year. Although incomes dropped by the most they ever have in the past twenty years, consumer spending only continued to increase, showing households were “weathering the payroll-tax increase by socking away less money in the bank.” As employment gains act as the rebound for housing and auto, they will probably also keep supporting consumer spending in the first quarter of 2013 as the United States picks ourselves up out of the end of the year slump.

Ryan Sweet, an economist at Moody’s Analytics in West Chester, Pennsylvania, correctly projected the 3.6 percent drop in income and has stated, “The consumer is going to be able to support the recovery, but they’re not going to be able to take it to a higher level.”

Click here to read the full Bloomberg article

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