Lisa Simpson
Aug 26,2009
In: Finance

The Economy of USA Is Waiting Ansiously for Consumers to Start Spending

consumer

The economy is showing signs of a turnaround and waiting anxiously for the consumers to start spending. The job market however remains weak and the debt index high.
The good news is that stocks have rapidly revived jumping by 47% from the lowest mark in the first week of March this year, according to Standard & Poor 500 index. Keith Hembre of First American Funds said, “Clearly this is a wealth effect. While the stock market has gone up, home prices have continued to head down.” He explained that with Americans feeling wealthier they may be lured to start spending once more. But he warned about the bleak look of the real estate market.

Some pundits are pointing to the general health of the economy showing signs of recovery in contrast to 2008 and the first part of 2009. John Ryding and Conrad DeQuandros of RDQ noted, “It is increasingly looking like the recession ended in May or June.” The former chairperson of the Federal Reserve was not far behind in his optimistic comments. Speaking to ABC he said, “I’m pretty sure we’ve already seen the bottom.”
On 4th August 2009 the Department of Commerce noted that spending by consumers had increased by 0.4%. There was an increase in non-durable stuff (1.7%) in June this year. By non-durable stuff is meant anything that does not last for more than five years. This caused the increase.

The housing section is showing definite signs of stability from date being released. Sale of homes went forward by 3.6% in June this year.

The Federal government is trying to create a climate of spending. One of its programmes for helping is the “cash for clunkers” scheme. This has led to the sale of new cars. For the first time since the previous two years Ford sales rose by 2% in July. The Senate is mulling over extending the incentive to potential car purchasers. Ryding and DeQuadros think this will give “a pop in consumer spending” in the current quarter.
Despite the upbeat feeling the harsh reality is that the job market continues to worsen. This means their pockets and purses are empty. So who will spend? In economy the numbers are slowly improving said Michele Gambera of Ibbotson Associates but he said, “The worry is that employment will not pick up anytime soon.” Unemployment fears are making many Americans focus more on saving than spending.