Tag: consumer spending
Three Mistakes You’re Making Before A Big Purchase

Three Mistakes You’re Making Before A Big Purchase

By Cameron Huddleston, GOBankingRates.com (TNS)

You might have kicked yourself a few times for making a bad purchase or buying something that later went on sale, but if you didn’t pay a lot to begin with, you probably didn’t lose sleep over it. But making a mistake with a big-ticket purchase will weigh much more heavily on you and your bank account.

When it comes to buying an appliance, computer, television, car, or any other item that can put a big dent in your wallet, it pays to shop smart. Not only should you do your research by reading reviews and comparing prices, but you should also avoid making these three common mistakes that can cost you hundreds of dollars.

Falling For The Extended Warranty Upsell

When you buy a big-ticket item, you’ll likely get the hard sell to buy an extended warranty. It makes sense to spend a little more to protect your purchase, right? Wrong. “One of the biggest mistakes we see shoppers make when they buy a big-ticket item, whether in-store or online, is falling for the upsell extended warranties,” said FatWallet.com online shopping expert Brent Shelton.

Why skip the warranty pitch? For starters, you likely won’t need the extra coverage. Consumer Reports’ Extended Warranty Buying Guide notes products typically don’t break during the two- to three-year extended warranty period, and if they do, repairs cost about as much as the warranty.

Plus, your purchase might already be covered if you used a credit card. CardHub.com found that the four major credit card issuers — Visa, Discover, MasterCard, and American Express — will extend the warranty up to one year on items with an existing manufacturer’s warranty. Or, you can look for a lower-cost extended warranty than the one the retailer is pushing from a protection plan service such as Square Trade, Shelton said.

Waiting For A Big-Ticket Item To Break Before Replacing It

You won’t do your wallet any favors by waiting for an appliance, computer, television, or other big-ticket item to stop working before buying a replacement. “If you buy these items when they break, a lot of times you buy them when they are not on sale,” said Howard Schaffer, vice president of deal site Offers.com.

If you have an item that’s showing signs of wear and tear and isn’t working as well as it used to, shop for a new one during one of the big three-day holiday weekend sales, such as Memorial Day and Labor Day. Many big-ticket items typically are marked down at least 20 percent to 30 percent during these sales, Schaffer said.

If you need to replace a car, you’ll get the best deal by shopping at the end of the month, when dealers are eager to meet quotas, and in early fall, when new cars arrive on lots and the previous year’s models drop in price, according to Edmunds.com.

Settling For The Sale Price

Although sales on long holiday weekends offer opportunities to save, Shelton said consumers shouldn’t settle for the marked-down price without weighing other savings options.

You might get a better deal by taking advantage of price-matching policies, for example. Perhaps the item you want is on sale at one retailer but another retailer offers better perks, such as free delivery and haul away of old items. If that other retailer has a price-matching policy, you might be able to get the lower price and the perks. (See which stores offer price-match guarantees.)

Also look for cash-back offers that can add up to big savings, Shelton said. Sites such as Ebates.com and FatWallet.com partner with online retailers to let consumers earn back a percentage of the money they spend on purchases. By shopping online through these sites, you can take advantage of sales and earn cash back — essentially lowering the price of your purchases even more.

Whether you’re ready to buy an expensive item you’ve been wanting or you now realize that you better replace an old item on its last legs while the new version is on sale, you can go into a store or go online knowing that you have options. Do the extra bit of research and negotiation to get the best deal.

Photo: A group of Chevrolet Camaro cars for sale is pictured at a car dealership in Los Angeles, California April 1, 2014. REUTERS/Mario Anzuoni 

Consumer Spending Bolsters U.S. Second-Quarter Growth

Consumer Spending Bolsters U.S. Second-Quarter Growth

By Lucia Mutikani

WASHINGTON (Reuters) — U.S. economic growth accelerated in the second quarter as solid consumer spending offset the drag from weak business spending on equipment, suggesting a steady momentum that could bring the Federal Reserve closer to hiking interest rates this year.

Gross domestic product expanded at a 2.3 percent annual rate, the Commerce Department said on Thursday. First-quarter GDP, previously reported to have shrunk at a 0.2 percent pace, was revised up to show it rising at a 0.6 percent rate.

The revision to first-quarter growth reflected steps taken by the government to refine the seasonal adjustment for some components of GDP, which economists said left residual seasonality in the data, as well as new source data.

The Fed on Wednesday described the economy as expanding “moderately” while upgrading its view of the labor market and saying housing had shown “additional” improvement. The Fed’s assessment left the door open for a possible hike in interest rates in September, which would be the first rise since 2006.

A separate report showed first-time applications for state unemployment benefits increased 12,000 last week to a seasonally adjusted 267,000. However, claims remained not too far from their cycle lows.

The dollar extended gains against a basket of currencies, while prices for U.S. Treasury debt fell slightly.

Though second-quarter GDP growth was a bit below economists’ expectations for a 2.6 percent rate, the growth composition pointed to firming domestic fundamentals.

A measure of private domestic demand, which excludes trade, inventories, and government expenditures, increased at a 2.5 percent rate after rising at a 2 percent pace at the start of the year.

Growth in the second quarter was boosted by consumer spending as households used some of the windfall from cheaper gasoline in late 2014 and early this year to go shopping. The strengthening labor market also encouraged consumers to loosen their purse strings.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.9 percent rate from a downwardly revised 1.8 percent pace in the first quarter. Consumer spending was previously reported to have increased at a 2.1 percent rate at the start of the year.

The saving rate fell to 4.8 percent from 5.2 percent.

Energy Drag Persists

Housing also supported the economy in the second quarter, as did exports, and state and local government spending.

However, the energy sector continued to weigh on growth as it struggles with the lingering effects of deep spending cuts by oil-field companies like Schlumberger (SLB.N) and Halliburton (HAL.N) in the aftermath of a more than 60 percent plunge in crude oil prices last year.

Business spending on structures fell at a 1.6 percent rate after stumbling 7.4 percent at the start of the year. Investment on equipment fell at a 4.1 percent rate.

Spending on mining exploration, wells, and shafts plunged at a 68.2 percent rate, the largest decline since the second quarter of 1986. This category dropped at a 44.5 percent pace in the first quarter.

But there are signs that the energy spending rout might be nearing an end. Data last Friday showed U.S. energy firms added 21 oil rigs last week, marking the third increase over the past 33 weeks.

Schlumberger said last week it believed the North American rig count may be bottoming and that a slow rise in both land drilling and completion activity could occur in the second half of the year.

Exports rebounded in the second quarter, despite a strong dollar, while imports rose moderately. That left a smaller trade deficit that added 0.13 percentage point to GDP growth.

Inventory investment slowed after the first quarter’s brisk pace. Businesses accumulated $110 billion worth of merchandise, down from $112.8 billion in the first quarter, good news for the remainder of the year.

With oil prices rising during the second quarter and consumer spending picking up, inflation accelerated sharply.

The personal consumption expenditures price index rebounded at a 2.2 percent rate, the fastest since the first quarter of 2012, after falling at a 1.9 percent rate at the start of the year. Excluding food and energy, prices increased at a 1.8 percent pace.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Photo: A customer shops at the Wal-Mart Neighborhood Market in Bentonville, Arkansas, June 4, 2015. REUTERS/Rick Wilking

The Joneses Win: The Why Of Weak Consumer Spending

The Joneses Win: The Why Of Weak Consumer Spending

A new report on consumer spending shows that consumers are not spending. Economists thought that the savings from cheaper gasoline — hundreds of dollars a year for most — would be hauled to the stores. But non-gasoline retail spending didn’t budge last month, flat after falling a bit in December, according to the Commerce Department.

The strengthening job market and expected wage gains should also be making American shoppers feel more exuberant, but no. That’s a concern in a country where consumer spending accounts for two-thirds of the economy.

Here’s my explanation for what’s happening. There’s been a growing aversion to the shopping way of life. There’s a sense that the consumer culture has been a con job, epitomized by the sucker punch of last decade’s real estate bubble (and attendant mortgage scams).

There’s also a feeling that one traditional motive for buying stuff — the competitive race to “keep up with the Joneses” — is futile. The famous 1 percent are pulling away so fast from the other 99 percent that there’s no point in trying. Even the “merely affluent” can’t compete.

A study in Britain found that money only makes people happier when they have more than their neighbors. It’s more about social rank than the number of zeros behind one’s personal wealth. A millionaire feels poor in the presence of the super-rich.

Thus, the ever-inventive American culture has found a new way to rank people socially. More of us are replacing price tag display with the hip alternative of living in small spaces with fewer, but more curated, possessions. Rather than hire experts to make our closets accommodate more stuff, many are deciding to simply have less stuff. We are driving fewer miles, and many millennials are forgoing car ownership altogether.

The Commerce Department reported that the personal savings rate rose to nearly 5 percent in December, up from 4.3 percent the month before. Interesting.

The new social ranking system may be influencing some for whom the money race is theirs to win. The Wall Street Journal publishes a weekly section called Mansion, which centers on luxury real estate that tends to be enormous in size and astronomical in price. But in the aesthetic of minimalism chic, the architectural hulks — with their onyx bars, guest villas and ionized lap pools — seem dated.

So the recent Mansion section had a feature on “little getaway houses,” small homes for those who live big. These were not your worn cabins in the woods but spectacular little places, often on lots with primo views.

“Keep it simple,” said an investment manager who has a smallish house on the Maine coast — but owns several other homes, where the art is kept. Small, in this case 1,200 square feet, need not be inexpensive. The house is built on reinforced fiberglass piers that let the waves roll under it. (If you’re going to do waterfront, do waterfront.)

Another small house, 1,000 square feet on Washington state’s Padilla Bay, has a glass cover and hand-planed cedar floors. “The more intimate the house, the more it supports the need for connection,” said one of the proprietors, who also owns a hacienda in Chiapas, Mexico.

To keep some perspective on what constitutes small, note that families of six were quite content living year-round in their 800-square-foot Levittown houses. But one can appreciate the desire of the wealthy to escape their toad halls for some cozy time in a badger cottage.

Many Americans of more modest means, however, are dispensing with the mansions altogether. You don’t feel behind in a race you don’t enter. And if these weakened material aspirations are here to stay, things won’t be looking good for the consumer economy.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators Web page at www.creators.com.

AFP Photo/Scott Olson

Auto Export Gains Narrow U.S. Trade Deficit In July

Auto Export Gains Narrow U.S. Trade Deficit In July

Washington (AFP) — The U.S. trade deficit shrank for the third straight month in July helped by gains in exports especially from the automotive sector, Commerce Department data showed Thursday.

The monthly trade balance came in at a negative $40.5 billion, down from a $40.8 billion deficit in June.

Exports rose $1.8 billion to $198.0 billion, while imports gained $1.6 billion to $238.6 billion.

Cars and trucks, parts, and engines were the primary force behind the export gains, up $1.7 billion in the month to $15.3 billion.

Also showing strength were exports of oil products, industrial machinery, and telecommunications equipment, including cellphones.

Meanwhile crude oil imports picked up, while consumer good imports fell.

For the year to July, the trade deficit at $295.3 billion was 4.6 percent larger than a year ago, with exports for the seven month period up 3.1 percent year on year and imports growing 3.4 percent.

Analysts said the improvement in the deficit should give a boost to overall economic growth in the third quarter, if sustained.

AFP Photo/Bill Pugliano

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