On the heels of a year when consumer spending increased faster than it has since 2006, experts are optimistic about the economic future of our country. This forecast is good news for a nation that has spent years riding out an economic downturn that hit its lowest point during the recession of 2007 – 2009.
But 2015 saw a reduction in oil prices that lowered the cost of transportation, food, and raw materials for business and gave consumers more disposable income to spend. Reuters stated that consumer spending was at its highest in almost six years this past May, which is evidence of the improved financial mindset families and businesses shared in the summer of 2015. Further evidence is the fact that unemployment fell to 5% — its lowest level since 2008.
What this means for 2016
The hope for 2016 is that hiring will continue to increase along with consumer spending. A healthy economy brings a more relaxed attitude when it comes to spending money on real estate, consumer staples, and luxury items. In addition, these consumers tend to travel more and are less likely to conserve on utilities.
Reuters advises that strong consumer spending is the latest marker that the economy is growing, with positive data for economic sectors including the housing market and employment. Businesses also are expressing optimism that economic conditions are continuing to improve.
Consumer spending represents about 70 percent of U.S. economic activity, it is a good measurement of consumer sentiment. Businesses also use information on consumer spending to estimate supply and demand and to set pricing that’s favorable for profitability. All these statistics work together to indicate a positive trend for the overall economy in the coming year.
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