According to The commerce department there was a rise in consumer spending of 0.4 percent in January and this was above what was projected by analyst. One analyst cited increases in prices due to inflation as the reason for this rise in spending and when adjustments are made for inflation it was found that spending was really flat. This was the second straight month that consumer spending was flat and this expected to continue for a couple of months in spite of the Federal Governments stimulus plan.

Consumers are very concerned about the continued rise in the price of oil on the world market (which is close to $102 a barrel) and the resultant cost of gas at the pumps. They are also concerned about the restriction placed on lending by financial institutions. With the prevailing problems in the real estate market and the fall in property values consumers are caught between a rock and a hard place. They are weary about spending on items they do not need and are concentrating on those items that are absolute necessities. To say consumer confidence is down may just be an understatement.

Economist have noted that since December 2001, this is the worst that consumer spending has been and at that time the nation was easing itself out of a recession. Consumer confidence is presently at its lowest monthly reading in almost over 16 years according to the University of Michigan survey on consumer sentiment.

Another reason why consumers are not buying is that the job market has weakened which means that more persons are out of a job at the moment and this situation could get worse. This has forced many persons to save their money just in case they get laid off. With economic growth basically stagnating since October 2007 the Governments rebate check cannot come soon enough. Some economists believe that things will begin to pick up for the economy and the consumer when the rebate check will begin to be accessed by consumers in May/June. This $107 billion in rebates I is hope will help to bring the country out of this recession. This obviously is to be seen.

The President however does not believe that the country is in a recession as he told reporters last Thursday but many economists will disagree with him and many consumers are fearful that he is dead wrong. Therefore until things reveal themselves consumers are playing it cautious with their money as they watch and wait.