Thursday, December 11, 2014

Consumer Spending Rebounds Over the Holidays

Consumers are all smiles as they open their checkbooks and walk into the stores in search of great deals for the holidays. After stretching Black Friday beyond its traditional one day bonanza they have shocked us again with their spending vibrancy.  According to a report by the U.S. Census Bureau retail and food service sales improved 7% beyond last month and 5.1% when compared to last year. The numbers took into account seasonal differences, holiday sales and trading-day differences.

Consumers are buying more because they feel optimistic about the economy and their living costs are declining on a number of fronts thereby leaving them more discretionary income.  The extra money didn't  sit around long and got swept up into the latest deals and products that improved higher retail and food buying rates. Dining and shopping have made a comeback.

Consumer spending is one facet of a stronger economy. To have a fuller recovery it is necessary to improve manufacturing and exportation. Spending should be balanced with savings and investment to create longer term growth. Improved consumer spending numbers are great but they are not the whole story.

Lower oil prices, hiring trends, manufacturing improvements, and general optimism all seem to be working together.  As each of the levers moves up and down the American economic engine appears to have gained a net step forward.  Multiple indicators show a general trend of improvement that will continue into the mid-term.

Consumer spending is improving with retailers and restaurants receiving the majority of benefits. Improved spending parallels improved moved in consumer sentiment and opportunity.  As consumers feel that their future opportunities are improving they are willing to horde less and spend more. Good mood leads to increased spending. Hopefully, the trend will continue across multiple fronts  to create broader economic impact.

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