(TheRedWire.com) – The revelry of summer spending by Americans appears to be drawing to a close. Over the summer months leading to September, people in the U.S. actively contributed to a thriving economy, despite experiencing diminishing personal incomes and savings, all while grappling with inflation and mounting loan expenses.
According to a recent announcement from the U.S. Bureau of Economic Analysis, the nation’s economy saw a near 5% expansion in the year’s third quarter. This growth was largely anticipated by financial experts who predicted a range of 4.5 to 4.9% expansion, crediting the surge to Americans splurging on travel and leisure activities. The bureau itself attributed the economic vibrancy to elevated levels of consumer spending.
However, warning signs about financial well-being have begun to emerge. Although personal income did see an increment, rising to $199.5 billion in Q3, it fell short of the $239.6 billion earned in Q2. Moreover, disposable income experienced a drop from a 6.1% leap in Q2 to a modest 1.9% increment in Q3, amounting to $95.8 billion. In addition, savings plummeted to $776.9 billion from $1.04 trillion, and the personal saving rate dropped from 5.2% to 3.8% compared to the previous quarter.
Last week’s statistics only deepened this narrative. September witnessed a robust 12% month-over-month increase in the sale of new single-family homes, surpassing forecasts. Retail and food services also raked in billions, as companies kept their workforce intact, thereby boosting spending power. According to recent reports, including one from American Express, the appetite for spending on travel and entertainment persists, although it remains to be seen how this will evolve as we approach the holiday season.
So, while Americans have indeed been liberal with their wallets over the sunnier months, caution flags are going up. A decline in personal income and savings suggests that the spree might be unsustainable, especially in the face of rising living costs.
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