Increasingly more data confirms consumers have significantly changed their spending habits. In the short run this hurts economic growth since consumer spending has accounted for 70% GDP. In the long run, however, higher consumer savings will have a positive impact on the economy.
Earlier this week it was reported that consumer credit outstanding fell at an annualized rate of over 10%. This represents a $21 billion drop consumer credit outstanding.
Earlier this week it was reported that consumer credit outstanding fell at an annualized rate of over 10%. This represents a $21 billion drop consumer credit outstanding.
In addition to consumers paying off more of their outstanding debt with their free cash flow, they are saving more on their income on a percentage basis as well. This was highlighted in an earlier post at EconomPic.
Source: EconomPic
The EconomPic post is interesting to read as it discusses the interplay between savings and investment.
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