April Consumer Spending Drop Not Expected to Last

Wall Street Journal - May 31, 2013

While Amer­i­cans pulled back on spend­ing in April some­what, it has not affect­ed the auto indus­try and ana­lysts do not expect the rest of the year to fol­low suit as con­sumers con­tin­ue to spend.

Find out what mar­ket watch­ers and ana­lysts see as the eco­nom­ic trend.

Amer­i­cans pulled back on spend­ing in April after splash­ing out ear­li­er this year, rais­ing the ques­tion of whether they will be able to pow­er the eco­nom­ic recov­ery through a rough patch of gov­ern­ment cuts and slow­er glob­al growth.

The revival of the hous­ing mar­ket has been all over the news in the past weeks but as MarketWatch’s Jim Jel­ter explains, there are three oth­er areas of the econ­o­my that are doing bet­ter than you think.

Despite the soft April spend­ing — which fell 0.2% from March, accord­ing to Com­merce Depart­ment data Friday—the answer appears to be: yes, they can.

Mount­ing evi­dence sug­gests Amer­i­cans are becom­ing more upbeat. Con­sumer con­fi­dence rose in May to the high­est lev­el in near­ly six years, accord­ing to the Thom­son Reuters/University of Michigan’s index of con­sumer sen­ti­ment, released Fri­day. Con­sumers stepped up their spend­ing in the first three months of the year, while the nation’s retail­ers and auto com­pa­nies have been report­ing healthy demand.

Auto­mo­tive Note: Robert Shu­man, own­er of a car deal­er­ship in Detroit, says sales of new cars this Jan­u­ary dou­bled the pre­vi­ous year’s tally—and he has seen about 20% year-over-year gains every month since. His wor­ry is hav­ing enough cars to sell—and find­ing new work­ers. He recent­ly added four new sales­peo­ple.

“After more than five years of stay­ing most­ly on the side­lines, con­sumers are ready to unleash lots of pent-up demand,” said Bernard Bau­mohl, chief glob­al econ­o­mist at The Eco­nom­ic Out­look Group. “Sim­ply put, con­sumers are now back in the driver’s seat steer­ing this econ­o­my for­ward.”

 

 

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