Today, Bloomberg News reported consumer spending to be lower than forecasted for October, despite a gain in hiring during September. If more Americans suddenly have more disposable income, why is spending lower than projected? A Bankrate.com poll also reports that most Americans are most spending as much as they potentially could each month, a trend that is likely to continue into the holiday season. The most common reason people gave for this trend is that they are waiting for a raise. According to an online poll, 32 percent of people said stagnant income was their biggest concern, while the second most cited reason (by 29 percent of people) was an attempt to save more.
In addition, the poll revealed that financial concerns increased with age. Seniors citizens were three times more likely than those ages 18-29 to cite stagnant income as the primary reason for cutting back. However, individuals ages 30-49 were the most likely to agree they were making an effort to limit monthly spending, due to the burden of high lifestyle costs (tuition, child-care).
According to Greg McBride, senior citizens are forced to cut down on spending due to a record low interest rate on bonds, which are often a source of income for the elderly.
However, young consumers are saving more. Millennials are the most likely generation to cut down spending in an attempt to save money. McBride states,
Many of them are building a solid financial foundation.”
That growth of that foundation is likely due to awareness of student debt as well as high lifestyle costs, such as renting and home ownership. While saving is often considered a positive thing, economists also urge consumers to continue to spend at certain levels in order to maintain a constant cycle of economic growth.
Read more here- “The Reason Americans are Spending Less,” (Jonelle Marte, The Washington Post)