The economy is still recovering and in a fragile state right now due to slow growth, even though the stock market today looks heathly compared to late summer. United States households had to cut back on saving money in September to be able to spend more. Spending is rising steadily but incomes are rising very slowly if at all.
The increase in spending by consumers accounts for 70% of the economic activity. That is good, but income growth needs to pick up too. With many household budgets being stretched to the last dime, analyst warn that the current rise could be over sooner than later unless job growth expands too.
Reports show that savings are going down to an annual rate of $419.8 billion, which is the lowest rate since 2009 in the month of August. Incomes has gone down three months in a row. It has fallen throughout the whole third quarter.
Some economists are carefully positive about the stock market today. Europe is trying to take care of it’s debt nightmare and raise consumer confidence. It has dropped to recession levels. Businesses are being encouraged to hire as many people as possible. In October consumers moods were brightened by Thomson Reuters sentiment index rising.
There are many companies like Wells Fargo, who are trying to cut costs. They are handing out insurance plans that have employees paying higher premiums if they get ill. Poor incomes are going to be getting a lot of attention from the policy makers at the Federal Reserve. They are trying to aid growth and lower the jobless rate.
Officials who want to do more to help the economy might be held back by a slowing inflation revealed by the spending report. Slower inflation does help the burden on consumers though.
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