11/01/2004

Spending jumped in September

Consumers slowed down their spending in the late summer. However, the lack of spending was made up in September. Consumers boosted their consumption by .6 percent in the month of September. The gain in spending outpaced the growth in income.

The commerce department follows consumer spending closely because it accounts for one third of all economic activity. Researchers attribute the growth to big ticket consumption. Big ticket items include cars, or other big cash items.

Income growth increased to .2 percent, following a .3 percent rise in August. Economics illustrates, the greater the inflow of income the greater the inflow of consumption. The moderate spending in August bolstered savings. In September another growth in earnings attributed to a less thrifty consumer.


Third quarter GDP results were reported earlier in the week. Although GDP grew to 3.7 percent in the July-September quarter, GDP for the year is lower then expectations. Consumer spending which contributes to GDP was up 4.6 during the third quarter. However, the second quarter had anemic growth of 1.6. While GDP is rising is a good thing, the growth is less then analyst expectations. Sup par reports mean sell offs on Wall Street, which despite a few days here and there is what is being observed in the markets.

www.msnbc.msn.com/id/6380810/

6 comments:

Biancca said...

Its probably now a good thing that spending is growing faster than salaries are increasing. I think people may be buying more cars at this time of year because the dealers are trying to get rids of the 2004s to make way for next year's models.

John West said...

It does seem that consumers spend more during the last couple of quarters in the year. My personal belief is that consumers are looking for good deals during these quarters and are wary of being on the lookout for Christmas shopping deals.

Rufio said...

Maybe some of this spending can be attributed to taxes as well. If you buy some bigger assets with the money you have made during the year you will be able to deduct some of your earnings. Is this increase in spending just seasonal or is this an indicator that we are moving further out of the recession?

Bryce Larkin said...

This is a great problem, spending is back on track. This is another example of show the American people believe that we are out of a recession.

Dr. Tufte said...

Two questionable spellings that I'll let slide.

I'm not real happy with either the post or the comments. This doesn't have a lot to do with Managerial Economics, and the comments are weak.

Anyway, yes, spending and GDP are up. They've both been rising steadily for almost 3 years - we haven't been in recession for a long time now. As to the car sales, all this data is seasonally adjusted to remove those sort of effects.

Maudi said...

Consumer spending is definatly not up from years past. I feel this is because of things such as high oil prices people now have less money to spend. The only way to increase spending is to increase wages or cut commodities costs. This is why Walmart is such a good thing is because they give the consumer more bang for the buck.