Consumer attitudes on spending has a huge effect on the economy. Consumers willing to use their 
plastic, spend money on discretionary items and invest in large ticket items has produced an uptick in spending patterns in just a months time. Reports through consumer polls suggest that there are several factors that may contribute to increased spending. New credit card regulations and the hope of a slightly improving job market give consumers the confidence to spend once again.
During times of recession, coupled with high rates of job loss, people are afraid to spend money. This fear of spending causes a downward spiral for the overall economy; making the overall national situation worse rather than better. With increased confidence, improving economic circumstances and a more positive picture of the future of the economy, people naturally become more comfortable once again spending their money. Over time increased spending improves the national economy.
Financial Services Industry Looking Up
There is a downside to liberal spending. An increase in spending means an increase in credit card use and subsequently the potential for credit card debt. Interestingly, as quickly as spending habits halt because of fear of economic devastation, when confidence is boosted because of a better picture of the economy the spending habits quickly begin to increase.
Confidence Equals Spending
There is an obvious direct correlation between consumer confidence and spending habits. According to a press release issued on March 4th 2010 by RBC on Consumer Attitudes and Spending by Household or (CASH), there is a an 18.8% increase from February to March of 2010 in consumer’s positive outlook for the future of the job market. According to another report from Limited Brands Inc., who works primarily with specialty stores, they report sales increases of 10% from February, 2010, as compared with last year’s sales data. Limited Brands operates 2,970 specialty stores including Victoria’s Secret, Pink, White Barn Candle Company and Bath and Body Works. This data is a reflection of consumers beginning to have less fear of spending from this year as opposed to last year.
Consumer’s use of credit cards has become a way of life. The new credit card regulations went into effect on February 22nd 2010. These new regulations that were put in place to protect consumers against unregulated charges and fees may just add to the confidence towards spending. It is that confidence that can push the national economy to a better place. It is difficult to determine all of the factors that may be accountable for this changing trend in spending and confidence. The patter does paint a more optimistic picture for the future of the economy.
Although the credit card act is well intentioned and has appeared to give consumers more freedom to spend safely and with confidence, it is likely that over time the credit card act may have consequences. The Safe Credit Cards Project reports that the new laws may save consumers collectively $10 billion a year from just two pieces of that legislation. On the contrary credit card industries can anticipate losses of up to $50 billion over the next five years or so. Depending on how this legislation plays out there may be future consequences to recoup lost revenue from the credit card companies which may again spike that consumer fear to spend; thus starting the cycle over again.
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