Economy on the Upswing?
Economy on the Upswing… Or not?
Thankfully, the economy has started to get better. After two years of deficits, the economy is at least increasing a little bit. In July, spending went up a little less than half a percent. Now, this doesn’t seem like a lot, but any increase right now is a good increase.
Most Americans are attempting to save around 6.5% of their income, obviously conscious of the economy’s slow pick-up. Why the increase in spending in July?
Well, if you think about it, summertime is a time for vacations, kids are home more, eating out and other activities are more common. More people are driving places and such. But, obviously, it’s not as much as it used to be. People are doing things like stay-cations, where they find activities and entertainment in their local area as opposed to going long distances.
Although this is a bit of a pickup, the problem is that the short-term economic growth will be slow at best. Many households, instead of putting more money in the economy, are paying off previous debt. This is advantageous… eventually. But in the short term, it’s almost detrimental. If no money is going into the economy, it is hard to revitalize it, and may result in another downfall before the spending increase from households having decreased debt.
It’s strange how the economy, which originally got screwed up because of irresponsible use of credit, will stay screwed up because of people trying to get out of the debt caused by the irresponsible use of credit. So even though people are doing good things, the economy is still suffering. Shows you how much short term decisions have long term effects, huh?
