Consumer spending continues to help the economy avoid a recession or strong downturn, as it increased by 0.4 percent in March, double what was expected by economists' projections, said the Commerce Department.
Because spending was at a faster pace than growth in income, it did cut further into the savings of Americans.
One of the weak points for consumer spending with durable goods was the higher priced items, which continue to decline in sales.
When considering the high costs of energy and food, this continues to be an extraordinary story, as far as the resiliency of consumers. It seems they believe the economic problems in the U.S. are short term, as their actions show.
Consumer spending has such a dramatic impact on the U.S economy because it accounts for close to two-thirds fo the gross domestic product. So even if other sectors decline significantly, it shores up the overall economy.
"Consumer spending is moving sideways -- but at least it hasn't yet shown the sharp declines one might have expected given the recessionary readings for consumer sentiment," said Nigel Gault, chief U.S. economist at Global Insight.
Gault makes a good point here. What is the meaning of consumer sentiment when what they say is contradicted by what they do? It confirms that those responding to questions many times say what they think people want to hear, which can skew the results, like is obvious here.
This is why we as business leaders need to listen carefully to what the numbers say, rather than what polls and surveys reveal.
We also have to keep in mind it's an election year, and it's in the interest of the Democrats to make things look worse than they really are in the economy. While those games can be played politically, whether we're Rupublicans or Democrats we can't believe the rhetoric as is applies to our businessess.
It's one thing to play the political game, it's another to believe the assertions of that game.
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