With slow job creation and a mild winter, the overall spending of households in America wasn’t very high. Although it may have been initially rewarding to households, the mild weather of this winter has put a bit of a damper on overall household spending. With summer just around the corner and more jobs being added to the market, it is the opinion of many economists that consumer spending in the U.S. will start to increase.
Harm Bandholz, chief U.S. economist at UniCredit Group in New York, is one of the economists that believe consumer spending will pick up soon. “The situation for consumers has improved significantly over the last several months,” he said. “Spending is bound to accelerate, the most important driver being improvement in the labor market.” Since the Bureau of Labor Statistics released their jobs report this past Friday, it is easy to see the job market improvements that are slowly taking place. February jobs growth at over 200,000 jobs continues the best six-month streak we have seen in job growth since the year 2006.
Furthermore, since household spending on energy was particularly low due to a mild winter all around, this will increase as summer starts to show its face and the weather begins to get warmer. Bloomberg points out that lower energy bills are positive for the consumer, they initially depressed consumption. As household energy use is like to increase due to the approaching summer as well as a healthier job market, economists predict that overall consumer spending is like to increase at a 3 percent annual rate for the second half of 2012 since it is already at a 2.5 percent rate so far.
Bank of America Corp. Chief Executive Officer Brian T. Moynihan was quoted in Bloomberg saying, “the American consumer is healing. There’s still an unemployment problem, we all have to work to solve that. But this economy is much better than it was six months ago or six months before that. It just keeps feeling better.” As the job market continues to slowly improves, as will the economy and the spending rate of American’s. The improvements are slow, as we have stated in Spark News for a long time, but they are still improvements and it is important to take note in them. As these small improvements continues to rise, as does the health of the economy and the happiness of the consumers in this country.
IMAGE: Courtesy of Free Enterprise