FLINT, Mich. - The economy is rebounding faster than anticipated as restrictions lift and consumer spending rises, according to experts.
Economists have said that how things move forward hinges on spending behavior, but are people ready to return to pre-pandemic shopping habits?
“I didn’t really slow down or speed up,” said Pat Turnbull of Davison.
Jonathan Lymon, of Flint, has found it “hard to save,” he said.
“I’m spending less, now,” said Cindy Goulet of Algonac.
Goulet might be spending less, but she could not wait to buy fabric for quilting.
“I was buying some online, but it’s so exciting to go in the store before it’s cut and I get it,” she said.
She was not alone in cutting her spending.
Personal spending declined by nearly 13.6 percent in April, according to the U.S. Bureau of Economic Analysis (BEA).
The agency reported the personal saving rate jumped from 8 percent in February to 33 percent in April.
“Well, the issue is that consumption spending is about 70 percent of the economy,” said Chris Douglas, an economist at the University of Michigan-Flint. “Consumption really drives the broader economy.”
The National Bureau of Economic Research announced last week that the country has been experiencing a recession since February, which marked the end of more than a decade of growth that began in June 2009.
Douglas said the more reluctant people are to spend money, the longer it could take to turn the economy around.
“So, there’s a bit of a paradox where people are saving to try to weather a recession, but that saving could kind of prolong a recession that prevents spending that would help promote a recovery,” he said.
Financial advisor Nolan McIntosh, CEO and president of Freeland-based McIntosh & Associates Financial, reminded people to spend responsibly.
“Pay for things that you need like your household essentials or your mortgage or whatever that may be,” he said.
McIntosh recommended having enough money saved to sustain you for three to six months worth.
“There’s a possibility that the market could still do some interesting things,” he warned. “So, really, we need that buffer before we do anything with it (like spending or investing).
Goulet said she was being conscious of her spending.
“Buy what you need. Be careful what you buy,” she said.
Douglas said the optimism of consumers would be a significant factor in what the country could expect over the next several months. He projects that based on current indicators, and assuming that people return to normal spending and saving levels, the recession could end before the fall.