US Consumers Spending More Despite Confidence Dip
Regardless of what the panic-inducing news media might try to scream at its audience on any given day, the US economy is actually doing particularly well right now. In fact, the gain for month-on-month spending in April rose a full one percent reported the Commerce Department. That might not sound like much to be in awe of at first glance, but it is actually the largest of that type of rise since August of 2009. Furthermore, when you take into consideration the fact that more than two-thirds of all financial activity in the United States is from consumer spending alone, that one percent jump is actually massive.
The largest section of consumer purchasing that grew was in durable goods. Durable goods are products that don’t usually wear out quickly and includes things like refrigerators, toys, car rims, smartphones and other items that should work perfectly fine after years of use. This class of consumer good saw a huge rise at 2.3 percent while non-durable goods (things that get used up or wear out like clothes, toothpaste, cleaning products, etc) saw a respectable 1.4 percent growth. The not-so-fun part of spending money such as rent, utility bills and mortgages also bumped up in April. They those rose slower than consumer goods as a whole and only saw a 0.6 percent increase, though it is unclear if the cause here is due to price increases or because more people are finding places to live.
Furthermore, the income that people bring home continues to rise month after month as well. The growth in this category through April was 0.5 percent, which is a match to the rate that we saw in March. What one should keep in mind in this regard, though, is that every time the percentage on growth stays flat, the actual monetary value of the growth rises. For example, a growth of 1 percent of $100 would be $101, meaning a $1 monetary rise. Keeping steady at 1 percent growth, the $101 becomes $102.1 – the percentage stayed the same but the monetary growth was $1.10, a literal increase.
These gains in April are even more noteworthy seeing as neither March nor February saw a decline, either. While March itself was flat for growth, February actually saw a small 0.2 percent increase in spending.
However, and likely due to the aforementioned negative media coverage these days, the confidence level of consumers in the United States took a pretty large drop in May. The consumer confidence index fell from 94.7 in April by 2.1 to be 92.6. Despite the fact that employment opportunities are growing and incomes are on the rise, this confidence drop is due to a belief that the long-term job market is going to have problems. In actuality, this dip in confidence likely has much to do with the current election cycle as this year is proving to be especially divisive.