The consumer spending makes up 70% of the economy and last February, this part of the economy climbed in a positively higher level. According to the Commerce Department, consumer spending went up by 0.7 percent last month. This is the biggest recorded gain for the last five months, next to the 0.4 percent increase in January.
Economists believe that the reason for the jump is coming from a better job market that has helped offset the pains of higher taxes. Based on the report, the income of an average American employee has gone up by 1.1 percent so there’s more to spend.
Tax-income also went up by about 1.1 percent last month and this resulted in an increase in the saving rate too. In fact, the saving rate went up by 2.6 percent on after-tax income last month. This is a figure which is .4 percent higher than in January.
Better Economy in the next few months
The increase in spending, as a direct result of better income, is a great sign of economic momentum. Businesses have gone back to hiring, meaning they are ready to spend more. The stock market is also doing well than expected and the housing market, which has been a key to the positive US economic growth, continues to be strengthening.
If the positive effect of all these factors affecting consumer spending continues, there would be an experienced boost in the US economy that will run until March of this year. From this fact, economists ascertain an increase of 3%.
The 3% growth rate from January to March will encourage a 0.4 percent increase from October to December.
Economists believe that all these numbers are quite impressive, especially after the fact that consumer spending went up after the implementation of higher taxes on Social Security as well as a spike in gasoline prices.
The Future of Bad credit loans
The rise in number is very unexpected. Prior to the implementation of higher taxes, many have feared a decrease in consumer spending and the need for bad credit loans. Apparently, these fears hold little truth. This is because as the taxes increase, companies have picked up hiring and have slowly increased wages.
However, this does not mean that consumers will no longer use bad credit loans. In fact, it’s nice to know that no matter the circumstance and state of the economy, bad credit loans will still be there to aid consumers.