How does a strong economy typically influence consumer behavior?

A strong economy typically leads to increased consumer confidence, which encourages individuals to spend more freely, particularly on high-end items and luxury goods. When people feel secure in their jobs and optimistic about their financial future, they are more likely to make significant purchases and invest in high-quality or prestige products. This behavior stems from the belief that their economic conditions will remain stable or improve, leading to greater disposable income and a readiness to indulge in purchases that they may have previously viewed as unaffordable or unnecessary.

In contrast, increases in savings rates and decreased spending on luxury goods generally occur in weaker economic conditions, when consumers prioritize saving over spending due to uncertainty about their financial situation. A strong economy tends to reduce dependence on credit as consumers feel they can afford to pay in cash or make purchases without relying heavily on loans. Therefore, the increase in willingness to buy high-end items truly reflects the positive impacts of a robust economy on consumer behavior.