In 1998 the U.S. economy grew by 3.9 percent. Consumer spending accounted for 85 percent of that growth. Consumer spending in 1998 was primarily fueled by a low inflation rate, strong job growth, strong housing demand, and to some extent the rise in stock market valuations. Energy, commodity, and import prices have been generally low. The economy's strong job growth is reflected in the low unemployment rate.
Housing demand is at an all-time high, and the stock market continues to exceed expectations.
Consumer spending in 1998 increased by approximately five percent in real terms. Purchases of durable goods have been particularly surprising. Consumers increased their purchases of big-ticket items by more than 12 percent. However, the increase in consumer spending has been accompanied by high consumer debt levels and low savings rates. The savings rate dipped below zero percent and has remained at that level in recent months.