Consumer Spending Will Receive A Boost But Economy Could Still Struggle
With the deadline for filing taxes coming up next week, not too long after that the first of the new stimulus checks will be going out to millions of Americans. Consumer spending numbers will receive a much needed boost in the upcoming months.
However once that little jump is over like it was last year, economist will carefully watch those numbers in the fall up to the start of the next holiday shopping season. Like last year the worsening unemployment rate is also a major concern.
The unemployment situation plays a major part of consumer confidence and while financial markets may have improved by then the job market is expected to be weak for the rest of the year. There is also the fact that while interest rates are low right now, there is less available consumer credit than there has been in years past.
There are also many conflicting views on how far off a recovery may be, there are some that feel that it’s just around the corner while some feel that it’s at least a year away minimum. I’m of the feeling that we still have a ways to go, the housing market is still pretty much in shambles and while we have historically low mortgage rates at the moment, the credit situation hasn’t improved enough for the housing market to take full advantage, although it should hopefully put a brake somewhat on foreclosures as a record numbers of Americans refinance their existing mortgages.
The government’s plan to deal with the banking system’s toxic assets is still taking shape and it will be awhile before we can judge whether it will be successful or not. Even so the most important thing the government can do right now is to keep any major systemic disruptions from affecting the economy for the near future.
