Unemployment rates have been on the rise for several months in the United States and is expected to top 10 percent very soon. More importantly, wages and salaries dropped 0.2.percent in September according to the US Commerce Department. This suggests that while government officials say that the economy is getting stronger, at the grassroots level, Americans are still suffering the money and personal debt woes that are the earmark of recession.
Consumer spending dropped 0.5 percent in September and represented the first reduction in spending in the last 9 months. It is predicted that this year’s holiday consumer spending will likely be down from that of prior years. For some consumers this is the result of decreased income and unemployment. For others, the recession has brought a general fear of the “what ifs†and has promoted a keen interest in paying down debt while trying to increase savings.
In view of the rates of the last two years, inflation has remained more or less level, raising only 0.1 percent in September and totaling only 1.3 percent over the last year. The government’s calculation of the inflation rate does not include food and energy, however. Gas prices have risen to $2.70 per gallon over the past three weeks, a new high for this year.
While consumer hesitance to save money and a trend toward paying down credit card debt may be the right thing to do on a personal level the general reduction in consumer spending could slow recovery from the recession.
Tags: credit card debt
