Mini Age of Austerity?
Consumer behavior, specifically spending statistics, is being tracked with much anticipation these days. Given that consumer spending accounts for 70% of the economy, this is no surprise. So what is the forecast?
According to a new Associated Press Economy Survey, two-thirds of the 44 economists surveyed believe that the frugality created during the Great Recession will endure beyond the crisis (New Frugality for Many Outlive Recession, MSNBC.com, May 2, 2010). This prediction comes despite a drop in the national savings rate to 2.7% as of March from its high of 6.4% in 2009 and a recent increase in retail sales (U.S. Bureau of Economic Analysis). These economists believe that spending will increase as the recovery continues; however, consumers will not run up large amounts of debt to fund spending sprees. Rather, they’ll continue to save and remain conservative with their money in a Mini Age of Austerity, much like Britain experienced post WWII.
While there are some positive economic signs, we could be in for a slow recovery. Only time can tell how long this Mini Age of Austerity will last or if it will continue indefinitely.
