Do consumers spending show that the recession is coming to an end? Many consumers who feared the recession started to save their money. They wanted to make sure they had money saved if there was another great recession! So instead of spending it they were holding back. I read an article that is below from CNNmoney.com. They use the savings rate and the amount of increase on car purchases!
It is understood that if the consumer believes the market is coming back then they will start to increase the amount of cars that they will purchase or upgrade to another car. They will also be more likely to not save as much of their paycheck and use it for a night out or for new apparel items. This is also true that they will think their job is safe and they don’t need to fear being laid off from work. Although there are many people who are struggling with being laid off in the economy. This may show they have found a new job and rely on the new income and start spending more again! Does this mean that the recession is coming to an end. It is a slow rise but the economy is coming back!
Consumer behavior shows recession is over
By Chris Isidore, senior writer April 7, 2010: 11:21 AM ET
NEW YORK (CNNMoney.com) — Economists have been saying for a while that the Great Recession has ended. Now, there are signs that the general public is finally starting to agree.
Though still pitifully low, consumer confidence is improving.
But some of the positive economic news of recent weeks, like the best job gains in three years, the continued stock market rally and early signs of a turnaround in home values, is starting to make people more hopeful.
It’s a growing optimism that can best be seen in consumers’ actions, not their answers to various polls.
“If you look at what they’re saying, they’re still very nervous,” said Mark Zandi, chief economist at Moody’s Economy.com. “But if you look at what they’re doing, they’re more convinced that things have turned the corner.”
Consumer spending is improving at a faster pace than many had expected at this stage in the recovery.
The savings rate, which soared last year when people were afraid they’d lose their jobs and homes, has started to decline.
“That’s an indication of increased confidence,” said Keith Hembre, chief economist at First American Funds.
And home prices appear to be stabilizing too. With three quarters of month-over-month gains, according to S&P/Case-Shiller. Although prices lower than they were a year ago, the free fall seems to have ended.
“I think people are coming to the conclusion the worst is pretty close to over in the housing market,” said Zandi.
A key retail sales report on Thursday is expected to show that chain-store sales grew at a 6% rate in March. That would be the best increase in three years.
And auto sales are also improving, with almost all automakers posting double-digit percentage gains in March.