Economic Growth & Consumer Confidence

As of the month of October 2018, U.S markets have taken a massive hit going from “all time highs” to losing all gains in the entire year. While this is concerning to investors, most of Americans who do not own Stocks feel little to no change in their lives. In fact, most of the other economic indicators i.e. unemployment rate, wage growth, and job creation do not provide any sign of an economic recession or stagnation. While these indicators are important to understand the stability an economy, however one indicator which is normally not taken into account is consumer confidence.

Consumer confidence can be summarized as how confident people are in the economy based on how economically strained, they are. Majority of Americans, if they do not feel very economically strained tend to buy more goods/services. However, if times are very difficult similar to that of the 2008 recession, Americans tend to be more conservative with their money and spend less.

Following one of the worst trading days ever recorded on December 24th, 2018; December 25th however, showed a peculiar phenomenon. According to Amazon, “a record-breaking holiday season shopping spree” occurred where shoppers loaded their online shopping carts with a plethora of items ranging from top brand apparels to Amazon’s own devices. Amazons’ report also showed that in the U.S alone “more than 1 billion items were shipped for free using Prime”.

In addition, Amazon was not the only company which reported a massive increase in consumer spending for the holiday season. Other companies like Macy’s, Kohl’s, and Nike, also had very similar reports which showed a very drastic increase in sales on December 25th. Aside from retailers, Credit Card companies also saw an increase in sales during the holidays. Companies such as Mastercard and Visa reported an increase of “holiday sales of 5.1 % to more than $850 billion this year, the strongest growth in the last six years”.

This increase of holiday sales enigma demonstrated that even though there was a massive sale off in the markets, the population as a whole do not feel an economic strained. On the contrary, these reports not only show that the U.S economy is still very much healthy, but also bolsters the information the other economic indicators showed.

Source:

https://www.bloomberg.com/news/articles/2018-12-26/amazon-s-record-holiday-shows-consumers-appetite-for-spending

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