The U.S. Commerce Department reported that consumers spent more in July, mostly due to the popularity of the “Cash for Clunkers” program.
Yet despite spending, consumers are still worried that economic recovery is not just around the corner. Data collected about home sales, factory activity and consumer morale point toward an improved economic outlook and a slowing of unemployment. Consumer spending accounts for about 2/3rds of the U.S economic activity.
So what’s next? Look for ramped up spending as we head into the holiday seasons, a perk up in consumer morale and rise in personal income in the third quarter. Then, let’s see how the Fed will handle the pending inflation issues.