Consumer confidence in the economy continues to grow as income and spending strengthens the economy, according to the latest figures released by the Commerce Department on Monday.
Americans increased their spending by 0.8 percent in September. This comes on the heels of a 0.5 percent increase in August. Household purchases, which account for nearly 70 percent of the economy, increased along with overall income.
This is the most confident consumers have felt in five years, according to a recent Thomson Reuters/University of Michigan survey. The consumer sentiment index improved to 82.6, which is up from 78.3 in September and 74.3 in August, a significant increase from last October’s number: 60.8.
The economy grew two percent at an annual rate in the third quarter, and consumer spending expanded at the same rate.
Despite the good news in spending, consumers are saving less on the whole. Savings fell to $395 billion in September, which is a significant decline from the $445.1 billion consumers were saving in August.
At any rate, it seems consumers are taking note of declining gas prices and rebounds in the housing and labor markets. While the gains are positive, consumers still are not investing enough to significantly impact the unemployment figures, which will be released on Nov. 2.