Economy: The Optimistic U.S. Consumers - The Engine Of The Global Economy

There is a lot of speculation that the global economic upswing my come to an end soon because of the recessions in Europe and the cooling economies in China & India. But these fears are overblown. Yesterday we got news that the engine of the  global economy,  U.S. consumer spending, is still running smoothly.

"Americans increased their spending by the most in seven months as an improving labor market boosted confidence, adding to evidence that the world’s largest economy is gaining strength", wrote Bloomberg (bloomberg). Personal consumption expenditures increased in February $86.0 billion, or 0.8 percent and January spending was revised up (calculatedriskblog).

The rise in consumer spending is encouraging. It shows that U.S. consumers are still defying the climbing oil prices. The rising expenditures at the gas pump are still counterbalanced by the mild winter (less heating costs), the shrinking prices of natural gas and increased energy efficiency (cars and other machines burn less gasoline and electricity). The spending growth is financed by the recovering job market and by the rally on the stock markets that expands the wealth of American majority.

The data also show that the American consumers are still optimistic, instead of the perpetual negative news drum in the media. Maybe this positive thinking is encoded in the American genes as a heritage to the pioneer ancestors.

As long as the U.S. consumers are willing to expand their purchases, U.S. companies can continue their profit growth. Climbing consumer spending & company earnings will trigger more investments and create more jobs in the U.S. But not only American companies will benefit: Rising U.S. consumer spending also causes climbing imports that translate into rising revenues & profits  of European & Asian companies like Mercedes, Adidas or Samsung. This should help to stabilizes Europe and help China to avoid a hard landing.