One of the big drivers in the economy is consumer spending. A big hit to consumer spending can have serius consequences for economic growth. And with the recent run up in interest rates, the creative mortgages, and so forth, there has been some concern about consumer spending this holiday season. However, it looks like consumer spendin will be strong.
Keeping the nation’s cash registers ringing, consumers boosted their spending in November by the largest amount in four months, raising hopes shoppers will act more like Santas than Scrooges during the holidays.
That’s important — not only to retailers but also to the economy at large. Consumers are a major force shaping overall economic activity.
Thus far, they seem to be holding up fairly well to the strains stemming from the real-estate bust, where owners have anxiously watched the value of their homes either drop or not go up anywhere near as much as they had during the housing boom.
The Commerce Department reported Friday that consumer spending rose 0.5 percent last month. That was up from a 0.3 percent gain in the previous month and was the strongest showing since July.
Also, incomes rose by 0.3 percent as well. This is good in that it indicates that consumer spending will hopefully remain decent. It could even be that the economy will weather the slow down in the housing markets and that the expansion will slow, but not stop.
