Consumer spending expected to drop as Americans focus on debt
Quarterly increases in profit for Home Depot and Abercrombie & Fitch originally had analysts predicting an increase in consumer spending, but now some say that Americans should not expect the trend to continue. Retailers were cutting costs and keeping inventories lean, which is the only reason spending saw a quick rise, the Associated Press says. Consumers are concentrating on repaying their loan and credit card debt.
Consumer confidence is falling and more people are becoming focused on rebuilding their savings. TJX, which operates Homegoods, Marshalls, and TJ Maxx stores, is just one of many retailers still trying to woo customers to sign up for credit cards, despite the slow economy.
The AP reports that analysts will have a grim outlook until the unemployment rate, which was at 9.5 percent in July, begins to drop. Without a steady income, consumers cannot be expected to sign up for more credit and continue to spend.
Consumers finding difficulty repaying credit card debt could consider consolidation. By combining debt and taking out a loan with a smaller interest rate, borrowers can lower their monthly payments.