U.S. Consumer Spending on Long Path to Recovery

 

Newly frugal consumers seem likely to resume spending at lower rate. Forecasters James Meil and David Cross expect American consumers to come back alive over the next few years.
Courtesy of NielsenWire

The worldwide financial crisis and an economic recession that began in 2007 in the United States have prompted a return to frugality among American consumers, leaving countries that rely on exports to the U.S. market wondering when U.S. consumer spending will rebound, according to two economists. For the landscape industry this means that it could still take a year or two before a significant amount of consumers will invest in landscape improvements for their homes.

The two participated in a discussion on the future of consumption as an engine of growth that was broadcast to audiences in Beijing and Wellington, New Zealand. Their views differed when they discussed past consumer behavior, but they agreed on future trends. While U.S. consumers are unlikely to return to the liberal spending habits of the years directly preceding the recession, their demand for goods and services will pick up as the job market recovers, a process likely to take two or three years.

“It’s going to be a very volatile kind of recovery, a very weak recovery by historic standards,” said David Cross, president of Market Outlook, a San Diego–based consulting firm. “Probably in a couple of years we’ll all be talking about the great rebound in the American consumer, the consumer we all thought was dead.”

The drop in housing and stock markets cost U.S. households more than $10 trillion in wealth over the last year and a half, Cross said.

“Having been through the trauma of the last year, it’s a different mind-set, a more conservative mind-set,” said James Meil, chief economist at Eaton Corp.

Source: www.America.gov