Question

Background: How much do we purchase and how do we pay for these purchases? According to recent data from US Bureau of Economic Analysis, U.S. consumer spending (personal consumption expenditures) rose to over $14 trillion from June 2018 to June 2019. This includes spending on all categories, ranging from cars and furniture to clothing and health care. At the same time, the Federal Reserve reports that total household debt has increased to approximately $13.67 trillion. This includes housing debt, student loans, and other forms of household debt. This assignment is to research trends in consumer spending, saving, and borrowing, and to examine your personal behaviors. Assignment: Write a 2-3 page essay that discusses consumer spending, saving, and borrowing in the U.S. and to contrast those trends with your own situation. You are to also discuss your vision of how your future career will facilitate your purchasing behavior. In particular, students are to:

1. Explore the basic trend in the total and average consumer spending, saving, and borrowing, using data from the U.S. Census Bureau, Bureau of Labor Statistics, and Federal Reserve. Student will also discuss what is being purchased (e.g., categories of spending such as home, auto, restaurant dining, etc.) and forms of debt (e.g., categories of debt such as mortgages, student loans, credit card, etc.) 2. Investigate your own behaviors by tracking your personal spending for at least two weeks. Students should identify what types of items they purchased and how they paid for those purchases. Students will present that data in their discussion. 3. Discuss their chosen occupational field they would envision for the future, including income levels, type of education required, and whether the student believes that field would align with their personal financial goals. If uncertain of chosen occupation, students should be able to provide a significant discussion of how they intend to meet their financial objectives. If completely uncertain, the student is encouraged to seek advice from a reputable source.

Answer 1

1. Consumer spending is the acquisition of goods and services by individuals and households. It constitutes the largest part of the aggregate demand. There are two parts to consumer spending which are induced and autonomous consumption.  In the case of the USA, consumer spending data is published by the Bureau of Economic Analysis and has three broad categories. Durable goods include motor vehicles and parts, durable household equipment, recreational goods and vehicles, furnishing, and other durable goods. Non Durable goods include food and beverages for consumption, clothing, footwear, gasoline, and other energy goods, etc. Services include housing, utilities, healthcare, transportation services, recreation services, food services, financial services, etc. The analysis has shown that consumer spending has decreased by 33.2% in Q2 2020. GDP for Q2 showed that the economy contracted by 31.4% due to COVID. By understanding consumer spending statistics, we get a better understanding of the financial situation of the economy so the businesses can predict consumer behavior. Consumer spending was 13 trillion dollars in Q2. Spending on goods fell by 10.8% which includes durable goods like automobiles ( decrease by 1.7%) and non-durable goods like groceries ( decrease b 15%) and services like hair saloon ( decrease by 41.8%) In August 2020 the personal savings rate of the USA accounted for 14.1% from 33.7% in April. The personal savings rate is the ratio of personal savings to disposable income. The personal savings in the USA amounted to 1.3 trillion dollars in 2019. In the first half of the year 2020, there was an increase in the saving rate. People tend to save more rather than spending due to the uncertainty about the future. This is the reason for the spike in savings rate during the COVID period. In September 2020, the national debt increased to 26.95 trillion dollars. And the national debt per capita increased to 69,064 dollars in 2019. The national debt of the USA has been increasing continuously over the years.