In this economic climate with low prices, is spending or saving money smarter?
The economic recession seems to be slowly improving and the Federal Reserve still looks for ways to improve consumer spending. They also continue to seek ways to help with financial problems. The recession is predicted to level off later this year.
Interest rates are projected to be low as more money will be socked into the economy. The Feds may buy more longer term Treasury securities issued by mortgage finance agencies. Still the housing market is disrupted with reduced home values.
Unemployment is in all the news and there does not appear to be much of an improvement. Consumers may not be so quick to spend a buck after everything that has happened in the credit industy. Spending is the very thing the economy needs.
Bank lending reports reflect that credit is still tight. There has not been much of an improvement in the way of banks lending. Consumers have been concerned with the condition of banks and that has economic effects as well.
Some companies have been in a rush to put items on sale while consumers just watch for items to be further reduced before spending their money. There is concern that instead of spending more on reduced items to save money, that having a saving account would be a better choice.
"Thinking green" is the in thing as it could reflect savings on household bills. Energy efficient appliances may cost more but save more money later. This type of spending gives consumers something in return and is considered important spending that may help with taxes. More consumers are doing things themselves instead of spending money. Not many consumers are spending money at random but may be taking a closer look at how they want to spend money. What the economy needs is for consumers to spend and that may not happen until the unemployment rate decreases. The Feds may well have to put even more money into the economy before seeing more positive signs of growth.
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