During this past years spending was not a word used on people’s conversation. Prices have been rising like crazy and people have not been spending a lot. The recession was one of the reasons consumers spending decreased. Prices started rising and unemployment rate was increasing. At the end of 2010 and at the beginning of this year people were spending little by little, so the consumer spending is increasing slowly. Everything is a cycle, which means that we all depend on each other. If someone is not doing well it can affect me in one other way. America has been hit by what has been called the late 2000s recession. “The collapse of the housing market really set this one off on a bad note, and it, coupled with bank collapses in the U.S. and Europe, have caused consumer confidence and credit availability to plummet to new lows” (“United States Economy”).
During the recession consumer spending decreased, because of a lot of reasons. One of them was the unemployment. The rate has increased up to 15 percent. Now the unemployment has decreased a little, but California and Florida both have the biggest unemployment rates of the country.
The Term Paper on Unemployment Increase Rate Employment
... to increasing production because individuals were spending more on goods and services. These favourable supply and demand side conditions helped to decrease the unemployment rate ... more optimistic about future economic conditions. This increase in spending by consumers also lead to an increase in business confidence as firms had to ...
Also prices were starting to change, which will be another reason why consumer spending decreased. “Recreational-vehicle maker Winnebago Industries Inc. blamed gasoline prices as it watched sales fall in its second quarter” (Batter and Sparshott).
One of the biggest changes of prices was gasoline. Gasoline prices jumped 4.6 percent week on week. Another thing were materials like fabrics, metal and wood raised their prices, which means that everything that uses those materials will also increase their value. Big companies started to buy their small competitors. “Now, retailers don’t want anyone to get between them and their customers” (“Everyday higher prices”).
This year we are beginning to see the light little by little. Consumer spending is increasing. Instead of saving, people are starting to spend, but they are spending on non-expensive things. The unemployment rate has decreased a little, but Florida still has a high rate. “States that have suffered the worst of the housing bust continue to lag behind the nation in job growth, with Nevada, California and Florida still leading the nation with unemployment rates well over 10%, according to the Labor Department’s release of state unemployment” ( “Jobless Rate Falls”).
Also the income tax cuts has helped with the consumer spending. Now people are receiving more money on their paychecks and will start to spend more. “Congress and the Obama administration in December agreed to extend income tax cuts for Americans” (Batter and Sparshott).
People will start spending more money this year specially during the holiday season. I think that the spending depends on a lot of things, but mostly on unemployment rate. If unemployment continues to decrease spending will start increasing more. At least the income tax cuts that Obama agreed to extend is helping. On 2010 people got scared of spending, because of the recession. Everything got paralyzed, but on December people wanted the holidays to arrive as soon as possible. There is now a big increase on consumer spending.
Works Cited
Bater, Jeff, and Jeffrey Sparshott. “Consumer Spending Keeps Rising.” The Wall Street Journal. 29 Mar. 2011. Web. 17 Apr. 2011. “Everyday higher prices.” Economist 398.8722 (2011): 68-70. Academic Search Premier. EBSCO. Web. 25 Apr. 2011. Huffman, Mark. “Gas Price Increase Slows As 2011 Begins.” Consumer Affairs. 07 Jan. 2011. Web. 15 Apr. 2011. “Jobless Rate Falls in Most States; West Still Lags.” The Wall Street Journal. 19 Apr. 2011. Web. 23 Apr. 2011. “United States Economy and Global Economic Recession.” Recession. 16 May 2010. Web. 15 Apr. 2011.
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