Incomes Rise But Spending Remains Constant

Even if the economic crisis seems to be over and in many states the minimum wage is now higher and it is scheduled to increase considerably by 2020, many consumers still remain cautious and decide not to spend more but invest the extra money they earn in savings.

Numbers show a relative flatness in terms of spending last month. This was recorded as the lowest increase in spending recorded in the last three months.

While March registered an increase in spending by 0.5 percent, the biggest since last August, this has not changed in April, according to what the Commerce Department reported on the 1^st of June 2015.

These numbers were established by looking at the retail and auto sales recorded in April. It is quite unexpected, given the fact that personal income has recently risen by 04 percent. The same growth was expected in sales, but it seems that consumers are not willing to spend as much as they used to.

However, economists predict that the numbers are likely to go up in the following months, especially with the summer holidays coming. This is expected due to the fact that employment is more stable now than it used to be and incomes are higher.

It was estimated that 223,000 jobs were created in April and the unemployment rate has declined considerably within the last year.

The drop in gas prices will also most likely prompt people to spend the money somewhere else, as the price they pay for one liter of fuel is almost $ 1 cheaper than it was a year ago.

The amount of money consumers spend is extremely important because it represents more than 2 thirds of the entire economic activity. This is why it is so closely monitored.

“The April income and spending figures are another reminder that even though their incomes are rising at a healthy pace, households are still reluctant to boost spending more freely,” said the chief economist of BMO Capital Markets, Paul Ashworth.

Nevertheless, he stated that he is certain economy is on increase mode and it is likely to grow by more than 2.5 percent between April and June.

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