A surprise fall in retail sales in November due to a drop in spending
on discretionary items does not necessarily mean an interest rate cut in February, economists say.
Determining how much to spend
on discretionary items requires making decisions, such as how much to shell out for cellphone coverage and whether to eat out or cook at home.
In the Twin Cities, consumers» willingness to spend
more on discretionary items like clothing, entertainment and food is helping landlords avoid large concessions, says Tricia Pitchford, senior real estate associate at United Properties in Bloomington, Minn. «We realize the market is a little bit quieter,» she says.
If they're skating on the edge already, higher rates could force them to seriously curtail their
spending on discretionary items, which could send the economy into a tailspin.
Millennials — Americans born in the 1980s and 1990s, also referred to as Generation Y — will spend $ 69 billion
on discretionary items this year alone, according to data from a recent Harris Interactive study.
A tax refund is generally regarded as a type of windfall, «found money» that the recipient feels free to spend
on a discretionary item, when in fact it rightfully belonged to the individual in the first place and could go into the savings account.
Theoretically, the subsequent wealth effect would encourage businesses to invest in their growth, consumers to spend
on discretionary items and the overall economy to improve dramatically.
If you're spending $ 1,000
on discretionary items, ask yourself what else you could do with that money, Kay says.