Consumer spending is the key to the economic recovery. Consumer spending went up 0.8 percent in February, the best it has done in seven months, and retail sales increased 1.1 percent in February, the biggest gain in five months. But these gains might not last, according to Bloomberg.
Real household income after taxes dropped the second month in a row in February and is only up 0.3 percent compared with February 2011. Consumer spending has received help from saving less, and acquiring more debt may be short lived, according to the article.
It seems like consumers are being forced to save less and acquire more debt, according to Bloomberg. Nonrevolving debt is continually increasing as vehicle sales increase, and the slow economy leaves students in school or forces them back there. Tuition costs continue to increase, which encourages more borrowing, and interest from overdue loans piles up.
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