Latest data release by US officials suggests that consumer spending grew fastest in 3 years during 2010. The country had clocked a growth of 5.2 percent in consumer spending before recession struck. 2010 saw a spending growth of 3.5 percent over 2009, Commerce Department data showed.
The month of December alone recorded a strong growth of 0.7 percent, the sixth straight month of growth helping the economy close strongly in 2010.
Since consumer spending grew faster than income, overall savings rate dipped slightly for the month of December.
With the introduction of payroll tax cut and improving job market, spending will get a further boost in 2011; economists believe.
Stephen Stanley – Chief Economist at Pierpont Securities said: “As hiring picks up this year, income gains should accelerate noticeably, providing fuel for both modestly faster spending growth than in 2010 and a renewed rise in the savings rate”.
However, doubts still remain about the economic recovery as government spending cut and a struggling housing market may nullify these early gains.
The US economy had grown faster at an annul rate of 3.2 percent in the last quarter of 2010, up from 2.6 percent recorded in the previous quarter.