What's behind the uptick in consumer spending?

Joseph Klein of Sayville, N.Y., is assisted by Lowe's employee Ormani Rivera after his purchase of a generator in Hicksville, N.Y.

This week brought some bright news about an uptick in consumer spending -- something which might or might not mean a corresponding rise in credit card debt. Reporter Stacey Vanek Smith joins us to sort things out.

How much more are people spending in the U.S.?

Retail sales rose a tenth of a percent in April. That was a big improvement over what we saw in March, when consumer spending was actually declining.
 
Chris Christopher, director of consumer economics and demography at IHS Global Insight, says this might be a little deceptively positive.  Because of so many months spent saving and scrimping and because of worries about the fiscal cliff and other things, Americans kind of broke down and went on buying sprees.

"It looks like the consumer's doing relatively well. However, a word of caution: it's not like they're opening up the champagne bottles and splurging everywhere, it's a very targeted type of spending," says Christopher.

So what kind of things are people buying?

Americans are actually spending less on necessities -- groceries and on gas. Part of that is that gas prices are lower. What they are spending on are restaurants and a lot of home improvement type things -- Lowe's, Home Depot, some bigger purchases. In any case, we are shopping again and not just for the bare necessities.

Are people using plastic for these purchases?

You'd think so, because some of the items that were selling last month were big ones, but according to IHS Global Insight's Chris Christopher, that's not what's happening.

"What is bought on credit, is a little on the auto side," says Christopher. "However, revolving credit -- credit card debt --  has been relatively flat for a few years. In no way are we returning to our old ways any time soon."

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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