Are consumers going back to old habits?

According to economists, one of the reasons the wildly predictable recession occurred was because of the irresponsible spending of lenders. Lenders continued to supply credit for mortgages, loans and credit cards while the consumer continued to bite off more than they could chew. Despite these factors, it seems that consumers have yet to learn their lesson.

According to a recent CNN article, despite income raising 0.1% in January, spending has risen 0.5%. Ironically, saving rates have fallen from over 4.0% to 3.3%. The increase has raised a red flag for wary economists. The raise in spending has not occurred from excessive credit because lenders have cut down on how they provide credit. The increased spending has occurred as a result of those dipping into their savings. Consumers continue to be present-minded as they cash in on their savings and hope for the best, in the future. Many economists believe if spending continues at this rate, the near future won’t look too bright. With the continuous job losses and less people providing credit, for those who mess up, next time around will be harder to find help. Fortunately, as long as the spending does not become excessive, economists believe that this subtle increase in spending shows that consumers still have hope for the country.

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