US consumer spending unexpectedly increases

An unexpected glimmer of hope has emerged in the US as consumer confidence and consumer spending is now on the up, as for the first time in seven months consumer spending has increased with January being a very positive month as American consumers were able to take advantage of heavy discounts.

Analysts have indicated that this increase is likely to be unsustainable to the increase in job losses as the 0.6 percent increase was larger than economists had predicted after the 1 percent fall experienced in December.

The latest report by the US Labor Department has posted figures showing that personal income rose by 0.2 percent in January and this was further boosted by the fact that pay rises have been sanctioned for federal civilian and military employees.

The big surge in personal spending has helped to boost the nation’s gross domestic product. Meanwhile personal savings increased by $128.7 billion in January meaning that disposable income has increased by 3.9 percent in December to 5 percent which is a 14-year high.

The saving rate is a good indication that consumers are being cautious, although the possibility for change and a steady and sustainable increase in consumer spending is there.

Last month, the government posted the smallest annual increase in consumer spending for 47 years.

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