Consumer Spending Dropped To 4 Year Low

In last two months, there is huge financial crisis in all most every country. People are concentrating more on savings then spending. Confidence of consumers is low because of ongoing financial crisis and economists believe that consumer’s spending power is dropped to half. Consumer spending dropped by largest amount in last four years in September, while incomes suffered because of financial crisis.

According to Consumer Department report, personal spending fell by 0.3 percent last month and it is recorded as biggest decline since June 2004. In both July and August, the readings are flat, contributing to be worst quarterly performance in 28 years. Incomes showed a 0.2 percent rise in September and second half of August. Reductions in rental payments and earnings from businesses are affected by the rough weather and its aftermath.

Decline in spending was slightly worse than economists expected in September and it is confirmed that the economy will hit a wall in the third quarter due to weakness in consumer spending, which accounts for two-thirds of total economic activity.