Each month, economists, market research groups, credit analysts and the Federal Reserve track data on consumer spending. The data is in for January and some of February, and the results are interesting. The analysts at Credit-Land expected credit accounts to increase by $3.9 billion in January, but the Credit-Land industry outlook reports that credit accounts are up by $5.9 billion for the month of January. The greater than expected increase indicates that consumer sentiments about the economy may be changing for the better.
Purchase Items
The items that consumers are spending their money on may just surprise you. Consumers are establishing credit accounts for big-ticket items such as vacations, cars and boats, which increased by $9.26 billion in January 2011. This is unlike the consumers of a few months or a few years ago that were stashing every penny they could and spending as little as possible. Vehicle purchases alone are up by 17 percent and have been steadily increasing for six months in a row.
As an added twist, the sub-category of big-ticket items, such as vehicles, tends to be the ones that save money and the environment simultaneously. Sales on the Toyota Prius, a hybrid and great-gas-mileage-getting vehicle, are up 69.9 percent in January 2011. Most analysts and even consumers agree that this makes sense with the ever increasing gas prices. Where consumers are willing to spend money in one area, they are still trying to cut back in other areas.
Credit Card Spending
On the other hand, credit cards are staying firmly in place in the wallets of consumers. When you consider that credit card balances from December of 2010 to January of 2011 fell by $4.25 billion, it’s enough to convince you that credit card spending is not on the rise. This was a change in behavior from November 2010 because there was an increase in credit card balances from November to December of last year by $2.02 billion. Then, consider that December of 2010 was the first month since August of 2008 that credit card balances had increased and it’s added evidence that credit card spending is down across the nation.
Outlook
Economists and financial analysts expect this consumer spending trend to continue. While the figures are not yet tallied for February, retail spending is expected to be up and a continued increase in boat, vacation and vehicle purchases is expected as well. Vehicle sales in the hybrid and good gas mileage vehicles category is expected to stay steady. At the same time, credit card balances are expected to remain steady or in a declining position as more consumers concentrate on getting rid of debt or not racking up any additional credit card debt.
February and March numbers are still in the future. For now, however, consumer behavior indicates that Americans have a more positive and rosy outlook on what the future holds for establishing credit accounts. As consumers do, they are keeping economists and analysts on their toes because they are spending money on big-ticket items rather than starting to spend again on small purchases and then easing into larger purchases.
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