For the month of December, Americans reported spending the most since December 2008. According to Gallup’s monthly poll, self-reported spending jumped to $96 per day last month, the highest monthly average since September 2008, when the depth of the recession and economic crisis started to be felt across the country. While it must be remembered that the month of December typically sees the highest spending of any month because of holiday purchases, the trend in consumer spending is strengthening, and that trend is expected to continue into the new year.
This conclusion is supported by more than attitudinal data; 2013 saw the greatest gain in employment in eight years and the recovering housing and stock market strengthen household finances, which will enabled many Americans to increase personal expenditures in the new year. Plus, companies like Apple (NASDAQ:AAPL) and Ford (NYSE:F) have announced plans to expand their operations in the United States, a move that will further boost the country’s economy.
As ever, consumer spending levels remain all-important to economists; since the end of the recession in June 2009, the underlying question of many economic analyses was when would consumer spending return to so-called normal levels. Many American consumers continued to be in a difficult financial position and, because American consumers have been in a difficult position, so has the economy — consumer spending accounts for approximately 70 percent of gross domestic product. Since government and business spending have largely remained weak, the economy has depended even more on household spending to fuel growth. Yet, the United States is “ending 2013 with good momentum,” as Pierpont Securities chief economist Stephen Stanley told Bloomberg. “We’ve seen progress in the labor market. The rise in home values along with the run-up in equity prices is a big element of why people are feeling better” about their economic futures. In fact, consumer sentiment posted the strongest year-end reading since 2007.