By: Dr. Lynn Reaser
April numbers revealed a soggy retail sales report. Confounding expectations that spring would bring a rebound from spending depressed by bad weather, total retail sales did not budge between March and April and were up less than 1.0% from a year ago. With household spending accounting for about 70% of gross domestic product (GDP), it could be hard to generate strong economic growth if consumers stay on the sidelines
The personal saving rate dropped from an average of 4.8% in 2014 to 5.3% in March. What is going on? Consumers are using some of any income gains and lower costs at the gas pump to pay down debt and raise their savings. Stronger household balance sheets are important to the underlying financial health of the economy and should underpin higher expenditures going forward.
Consumers already are spending actively in the new car market, at restaurants, and online. If they have the means, Americans never skimp on shopping for too long.
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