February reported the strongest rise in consumer spending in seven months. Spending was reportedly up .08% compared to forecasts of up .06%. Household income is also increasing although the .02% increase reported was below expectations of up .04%.
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Consumer spending makes up 70% of gross domestic product (GDP) so this news means the economy is definitely on the rebound. The Bloomberg Consumer Confidence index reflected consumers’ willingness to spend. It had the second highest reading in four years. Consumers have felt optimistic about buying over the longest period of time since early 2008.
Worry about gas prices could make the recovery slower and cause consumers to rethink discretionary spending. For now, employment and other economic reports continue to show improvement.