Recent Survey Suggest Consumer Spending Increase

Joseph Byrne Monday, May 20, 2013

A survey of business economists predict that consumer spending will pick up this year, while government spending will decline. They forecast that the U.S. economy will grow 2.4 percent this year and 3 percent next year.

Due to the recent positive news about unemployment, they increased their prediction for consumer spending to 2.3 percent from the 1.9 percent prediction in February. They also project that auto sales will increase as well over 2012.

The National Association for Business Economics survey chair, Nayantara Hensel, theorizes that consumer spending will increase due to the increases in home values, stock market, and the decrease in unemployment claims. “Home prices are going up, and with also the improvement in the unemployment rate, people will be more willing to buy,” said Hensel.

While consumers are projected to spend more, the government is expected to spend 2.3 percent less. The automatic federal spending cuts make up some of this, but lower military spending “has already had a sharp effect on GDP growth,” says Hensel.

The good news is that the survey did not find much to suggest a potential inflation. Instead, the economy seems to be getting a lift, which is offsetting the government spending cuts and helping to find a balance that the economy so desperately needs. 

joeb@longislandyellowpages.com

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