Though the first quarter saw lower than expected consumer spending, with a growth rate of 2 percent compared to 4.4 percent in Q4 2014, spending is expected to increase for the rest of the year, according to Cushman & Wakefield’s Economic Update.
Income increases and lower energy costs are two of the main drivers of the upbeat prediction.
Income in the US has increased 6.9 percent over the last year.
And, oil prices have dropped over the same time period. Consumers spent 22 percent less on heat and gas in Q1 2015 than in Q1 2015, totaling more than $150 billion.
Another plus is rising consumer confidence. The University of Michigan’s Consumer Confidence Reading was at 95.9 in April (on a scale of 100), more than 10 points higher than April 2014.
So, why was spending weak in Q1?
Experts attribute much of the decline to severe weather during the first three months of the year.
And, consumer spending is expected to pick up in the second and third quarters, due to the improving weather, a strengthened economy, and stable energy prices.
What do you think about current consumer confidence? Is it really bouncing back, or will the consumer take more time to recover?
Source: Paul Townsend, Flickr