Catalyst for inflation

Amid the first signs of an economic rebound, Americans are ready to do what they do best: go shopping. That’s according to a new survey by credit-card company American Express.

People are starting to spend again, albeit slowly, after the savings rate rose to a 15-year high during the longest economic contraction since the 1930s. Abercrombie & Fitch, Aeropostale, The Gap, J. Crew and Nordstrom may benefit the most, as many of the 2,032 adult respondents in the survey said they plan to buy clothes. Also on their to-do list? Perform car maintenance and make an appointment at the hair salon.

American Express surveyed the general U.S. population as well as two sub-groups: the “affluent” and “young professionals.” The company’s Spending & Saving Tracker, the first in a monthly series of reports about consumers’ views about the economy and attitudes about spending and saving, was completed in late August. Consumer spending accounts for more than two-thirds of the U.S. economy, which fell into a recession at the end of 2007. Federal Reserve Chairman Ben S. Bernanke has indicated the economy has started to grow again.

Young professionals were more optimistic about the economy and more likely to increase spending during the next 30 days (24% versus 14% of the affluent pool and 10% of the general population), the American Express survey showed. Asked what they would be buying, two-thirds said clothing and more than half said dining out and travel.

Consumer goods will with reduced production via liquidation in higher stages of production drive the inflationary pressures. Reduced production will create the supply/demand imbalance, exacerbated by improving profit margins in lower stage consumer goods.