Consumer Finance

2016 Ended Sluggishly, Despite Hopes

There is much speculation for how the U.S.’ economic health will temper in 2017. While some say it’s looking up to be a solid year with consumer confidence up and Americans optimistic about their future credit journey, others see concern as the 2016 year comes to a close.

The Wall Street Journal reports that the year is ending with a case of anemia. From income growth to consumer spending and inflation — all are weakened despite a short spurt in the past two months. According to the Commerce Department, in November, household spending rose just 0.2 percent over the previous month, which is a slowdown and seen as flatlining. Also, inflation didn’t really change, and factory-made goods were not bustling out the door.

Analysts say that within the U.S. economy, the consumer is facing a fragile next year. With modest wage gains and overall low income growth, the next few quarters are not completely bright. Some researchers at Macroeconomic Advisers say the economy has been growing at 1.7 percent over the past three months of the year, while the Federal Reserve says 2016 will have a total of 1.9 percent growth and 2.1 percent growth for 2017.

Researchers say consumer support and business investment are necessary for building the momentum around growth; otherwise it could wane. Leading executives at companies like Dollar General have spoken out about consumers’ cinching budgets, which in turn cause less spending. Other big businesses like Indiana-headquartered, global engine maker Cummins are being cautious and say that the company is entering into the next year with a conservative view.

“What you will see is relatively conservative planning on market outcomes and pretty aggressive on how we get costs in line,” said Chief Executive Tom Linebarger, speaking to investors in November.

The post-election sentiment has increased hopes for tax cuts and deregulations, which could lend a kick start to businesses, consumers and, ultimately, the economy. However, that remains to be seen as well.

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