May 7th, 2010
Consumer Spending Back Up! Plus, Tips For the Savvy Spender
Have you been opening your wallet and dipping into your savings lately? A new government report shows that recent jumps in spending rates isn’t so bad after all, and in fact, is helping our economy.
A government report confirms robust spending growth for the sixth straight month, up 0.6% in the month of March. Retail sales also rose 1.6% in March, the highest number in the past months. This marks consumer spending at a three-year high, and with consumer spending making up about 70% of the U.S. economic acsavtivity, these numbers signal recovery. Growth in consumer confidence and spending means more hopeful signs of an economy getting back on its feet.
As spending makes its way back to normal pre-recession levels, the savings rate dropped 2.7%, the lowest level since September 2008. Slowing savings rate may be a result of consumers coming out of their frugal shell to worry less about savings and do more shopping. Hopefully, while spending returns to normal, the habit of saving and frugality—positive trends that came out of the recession—keep pace too.
If you’ve been burning through more cash lately, take the following golden rules to heart to ensure you still take good care of your finances as you spend:
- Keep up with the savings trend! Make it easy to save up by enrolling in automatic deposits to your savings account so you regularly save every penny you can.
- Watch out for credit card debt! Don’t spend more than you have; credit card defaults and charge-offs are one big trend of the recession you want to avoid.
- Keep track of your spending. Count every cash and credit transaction to stay on top of your finances. The more mindful you are about your financial situation, the more you’ll think twice before spending.
- You don’t have to spend more if you can help it. Check out coupon sites and product deals so you can get what you want without burning a hole in your pocket.
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