LARKSPUR, Calif.—The improving U.S. economy is encouraging consumers to put more money into personal consumption rather than into bank savings, observes one analyst.
Dan Geller, a behavioral finance scientist who also assembles the Money Anxiety Index, noted that during the second quarter, consumers increased their spending by 3.6% while adding little if any money to their bank savings.
“The shift in consumer behavior during the second quarter of this year is in contrast to the first quarter of 2015,” said Geller. “During the first three months of the year, consumers increased spending by only 1.8% while also increasing their bank savings, by 2.2%.”
Geller said studies in behavioral economics and finance clearly show how consumers shift money from savings to spending as the economy improves. Research conducted by Geller shows that consumers tend to spend more and save less when the economy improves because they have lower level of money anxiety.
The Money Anxiety Index, which measures consumers' level of financial worry and stress, declined by 2.2 points in the second quarter of this year. “The improvement in the level of financial confident amount consumers is paving the way for greater spending on the expense of lower savings,” said Geller.