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Tag: consumer spending

  • U.S. GDP Increases 3.2% in 4th Quarter

    U.S. GDP Increases 3.2% in 4th Quarter

    Ever since the government shutdown occurred in October last year, economists and consumers alike have been worried about the future state of the United States economy. Thanks to the latest reports from the Commerce Department, however, those fears should be allayed.

    During the 4th quarter last year, the GDP of the US rose 3.2%. While this figure is down from the 3rd quarter, which reported a 4.1% increase, it is significantly higher than growth earlier in 2013. For the entirety of 2013, the GDP only grew 1.9%, down from 2012 in which the measured growth was 2.8%. The initial decline earlier in the year was most likely the result of increased taxes and a tightened budget for federal spending.

    Along with the government shutdown, many people were worried that the economy was being artificially inflated through the Federal Reserve’s bond-buying program. Fortunately, the GDP report from the Commerce Department shows that that was not necessarily the case.

    Consumers and businesses were what spurred the 4th quarter growth. Consumer spending increased 3.3% over the holidays, up from a 2% increase in the 3rd quarter. This 3.3% increase marks the largest increase in consumer spending in the last 3 years.

    Businesses invested much more money into equipment, increasing their spending 7% in this department, while also increasing their stock inventories in anticipation of continued increased sales. If sales do not keep up with their current rates, however, these massive inventories could slow GDP growth in the 1st quarter of this year.

    A surprising contributor to GDP growth was an increasing number of US exports, which grew 11.4% in the 4th quarter. Imports showed a very minimal increase, meaning the US is finally making headway in its trade deficit.

    The biggest deductions came from the government shutdown and the housing market. The government shutdown reduced federal expenditures by 12.6%, leading to a 0.3% reduction in the overall GDP. (Lessened overall government spending reduced the 4th quarter GDP a total of 0.9%.) At the same time, the residential housing market declined 0.3%, marking the first decline for housing in the GDP since 2010.

    The biggest worry still, though, is the lack of job creation. While official unemployment rates currently sit at 6.7%, the majority of the decline in unemployment claims has come from those who have completely dropped out of the job market. The last report for weekly unemployment claims showed a 19,000 claim increase, the highest number in a month.

    “Everybody agrees that with each progressive quarter and year, it is getting better. But without a meaningful increase in employment, it makes it difficult to power strong growth in the future,” stated Guy Berger, a US economist at RBS.

    Luckily, the new Chair of the Federal Reserve just happens to be an expert on unemployment. Let’s hope Janet Yellen can help the US GDP and employment rates continue their upward trends.

    Image via WhiteHouse.gov

  • Consumer Confidence Rising Going Into the New Year

    The world economy has been slow to stabilize following the recession that began five years ago. In the U.S., high unemployment and low consumer confidence have led to a stagnating economic situation that is slowly crawling back.

    One of the market segments to weather the crisis well is the technology market. It seems that consumers have been saving their funds for larger purchases such as smartphones and tablets – particularly during the holiday seasons.

    This week the Consumer Electronics Association (CEA) revealed that its consumer confidence index for December is maintaining its higher November levels. The firm’s rating for December is even up slightly from last month.

    The CEA cites the coming end of the federal reserve’s stimulus programs as a major factor in the improved consumer outlook on the U.S. economy.

    “Consumers are closing out the year with a decidedly optimistic view as the sentiment index recovers lost ground from earlier this year,” said Shawn DuBravac, chief economist at CEA. “Recent announcements regarding Federal Reserve policy, as well as improving economic fundamentals, reaffirms that 2014 will begin on more solid footing than we’ve seen in the last five years.”

    Though the tech industry enjoyed massive Black Friday sales this year, it seems that consumers are broadening their spending habits this year. The CEA’s report shows that consumer tech spending expectations fell slightly in December. This follows previous findings from the CEA that showed consumer tech spending expectations rising throughout the late summer and fall.

    “Despite a small decrease, December sentiment levels are holding onto the positive momentum gained in October and November,” said DuBravac. “We are watching tech sentiment closely as key areas of growth – namely tablets and smartphones – will begin to slow naturally in 2014. However, several areas, such as wearable tech devices, will see gains as consumer awareness about these products continues to increase.”

  • Spending Rose Slightly in October, Shows Survey

    As the U.S. economy continues to slowly improve, Americans are starting to become more confident in their spending. According to the Gallup organization, average daily spending by Americans during the back-to-school month of August rose to $95 this year – the highest average its survey has measured in the five years since the recession began in 2008. That splurge was followed by a plunge to only $84 pre day in September, but Gallup’s survey has now seen another slight uptick in October.

    Average daily spending by Americans in October rose to $88 according to Gallup, which surveyed around 15,000 American adults. That $88 is the same as the average for 2013, up $16 from 2012’s $72 average.

    American spending has been slowly trending upward for the past two years. Gallup stated that the threat of a government shutdown may have caused Americans to become more thrifty during September. The end of the shutdown could also have been a factor in the small rise seen in October.

    Spending was up in October across a large cross-section of U.S. society. The few exceptions were women, who spent an average of $1 less per day in October and Americans over the age of 65, whose average daily spending dropped $8 month-over-month. The eastern portion of the U.S. on average also saw a small decrease in average daily spending.

    Americans with household incomes of over $90,000 increased spending even more than others, spending an average of $10 per day in October than in September. Americans between the ages of 50 and 64 also increased their average spending significantly, up $9 in October to $90 per day.

  • Consumers Ready to Spend Money on Tech This Holiday Season

    Though it was one of the few industries to maintain growth during the recession that began five years ago, the tech sector was not immune to the effects of reduced consumer spending. The U.S. economy is now beginning to slowly crawl back, though, and more consumers are now preparing to spend their money – especially on gadgets.

    The Consumer Electronics Association (CEA) this week released a new report showing that consumers confidence in tech spending in October reached the highest level since those seen in 2007. The industry group’s index that measures consumer sentiment toward tech spending hit 90.2 for the month of October – a full 9.5-point jump from the previous month.

    CEA estimates that sales during November and December of 2013 will rise 4% over those same months in 2012. Total holiday spending revenue in 2013 is expected to reach $738 billion.

    “Consumer interest in tech has moved up decidedly heading into the holiday season,” said Shawn DuBravac, CEA’s chief economist and senior director of research. “Exciting product announcements coupled with early retailer promotions and advertisments are likely behind the jump in sentiment toward tech spending this month.”

    CEA believes that the overall improving economy could be a big factor in the consumer confidence boost. The group’s measurement of overall consumer sentiment toward the economy also jumped two points in October. Another factor, according to CEA, could be the recent end to the government shutdown and the raised debt ceiling.

  • Consumer Tech Spending Could Be Slowing

    This weekend Apple once again set records, selling over 9 million iPhone 5S and 5C smartphones. With consumers willing to spend money every year on a smartphone upgrade (and mobile providers now encouraging them to do so), it would seem like tech spending will continue to skyrocket in the coming years. However, consumer tech spending could actually slow in the near future, if new data from the Consumer Electronics Association (CEA) is accurate.

    The CEA today revealed that consumer confidence toward technology spending has dropped down to levels not seen since 2009. The organization’s index for tech spending expectations fell 6.5 points in the past month.

    These results could be due to increased consumer patience. A CEA survey found that just over half (51%) of American adults intend to purchase electronics before 2014. Among those Americans, a full 62% of them stated they are waiting until Black Friday or later to make their tech purchase.

    “Despite key product launches this month, broad consumer appetite for tech showed signs of waning in CEA’s most recent sentiment readings,” said Shawn DuBravac chief at CEA. “Given some broader economic uncertainties and a generally poor back-to-school spending period, consumers might be holding back on tech purchases.”

    Though consumers seem to be putting off their tech purchases, Americans’ overall feelings toward the economy have not dipped. The CEA survey saw its index measurement for consumer sentiment about the economy drop less than one point in the previous month. Feelings about the economy have, however, dropped over 10 index points from this time last year.

  • Personal Finance Essentials [Infographic]

    While I believe truly healthy financial functioning is a myth for most people in this economy, there are certain things we can do to make our lives easier. While unplanned expenses like car repairs, medical bills, and other emergency costs can spell disaster for any budget, certain expenditures should be examined more closely to see where valuable cuts can be made.

    I think for most people food and entertainment are some of the most ripe areas for trimming the fat (no pun intended). Think about it, how often do you pick up a coffee or a snack? Do spend money on alcohol at the bar? These habits will make you poor in a hurry. Not that it’s not okay to enjoy them from time to time, but when they become habits, a larger and larger portion of your income will end up being pissed away.

    Entertainment is the same way. If you constantly go on road trips, take flights out of town, and escape for weekend getaways, the bills will start to add up. This next infographic from Lifetuner.org gives us some starting points to reference where are problem spending areas might be.

    Again, I think these figures are very idealistic depending on your income/debt ratio, but it’s something to strive for. Many people struggle with excessive credit card debt and enormous educational repayments, so that throws this whole picture into disarray.

    Take a look at what they came up with and see if there’s any spending you can cut to make your monthly payments more manageable. Living paycheck to paycheck is unfortunate and doesn’t leave you any lead way, but if you can manage to save a little, unplanned expenses wont be such a catastrophe.

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  • Who’s Buying and How?

    Who’s Buying and How?

    Researchers have always explained women’s love of shopping as the hunter versus gatherer instinct. Men would bring home the kill and women would forage for grains and berries. Since these primitive times the world has changed and technology has been a key component to our evolution. Taking a look at a new study by Zmags reveals we may not have changed that much.

    To make it easy lets take a look at the infographic from their site and see what they found:

    We can see that consumers have an overall (87%) preference for shopping on web and mobile sites. 60% shop using either digital or print ads, or both, and only 4% are using mobile apps. these figures suggest that there is still a lot of opportunity to develop application based shopping.

    Interestingly enough, the infographic also reveals purchasing preferences in the different consumer product categories. One item which stands out is for tablet users. They sure do seem to love their toys and electronics- two categories which I think go hand and hand for the young and young at heart. Perhaps this purchasing behavior is how they came to have their tablets before anyone else.

    But of even more interest is, who is buying. The most prominent internet shopper (gatherer) is the 40-something female. Her household income is around 63,000/ year and she is an active Facebook user (over 80% connected). 43% of these shoppers own smart phones and 16% are using tablets.

    This leaves me to wonder; are men too busy hunting for a good deal online to actually commit to buying something? Either way, this research suggests we still prefer browser-based shopping over apps and that means there’s a lot of room for growth in that market.