http://www.bloomberg.com/apps/news?pid=20601087&sid=aiPnRs_NOF.g Wow. So much bad news. Unemployment skyrocketing at the same time consumer confidence is plunging, retail sales are plunging, and interest rates and borrowing costs in general are creeping up. It's a toxic combination. Interest rates notwithstanding, people officially have deflationary expectations - anyone who has money will delay purchases, especially big ticket ones, as long as they can now. The vicious cycle is firmly entrenched. U.S. Michigan Consumer Sentiment Index Falls to 64.6 (Update2) Share | Email | Print | A A A By Shobhana Chandra July 10 (Bloomberg) -- Confidence among U.S. consumers fell more than forecast this month, reflecting unemployment approaching 10 percent and higher gasoline prices. The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 64.6, the lowest since March, from 70.8 in June. During the expansion that began in late 2001 and ended in December 2007, the index averaged 89.2. Unemployment last month rose to the highest level since 1983 while lower home values and rising gasoline costs are eroding Americansâ wealth. The report signals that consumer spending, which accounts for about 70 percent of growth, may remain subdued even as the economy starts to recover. âItâs a reality check,â said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York, who had predicted the index would drop. âIt speaks to job and income concerns. This suggests a sluggish profile for consumer spending.â The confidence index was forecast to dip to 70, according to the median of 59 economists surveyed by Bloomberg News. Estimates ranged from 65 to 72. The measure averaged 63.8 in 2008. Stocks fell after the report on concerns the economic recovery will be delayed. The Standard & Poorâs 500 Stock Index was down 0.3 percent to 879.78 at 10:51 a.m. today in New York. The index is still 30 percent higher than on March 9, when it hit 676.53, the lowest level in more than 12 years. Report Details A gauge of current conditions, which reflects Americansâ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, fell to 70.4 from 73.2. The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, plunged to 60.9, the biggest drop since October, from 69.2. Consumers in the confidence survey said they expect an inflation rate of 3 percent over the next 12 months, compared with 3.1 percent in the prior monthâs survey. Over the next five years, the figures tracked by Federal Reserve policy makers, Americans expected a 3.1 percent rate of inflation, compared with their 3 percent forecast last month. The preliminary Reuters/University of Michigan consumer confidence report reflects about 300 responses, compared with 500 households for the final survey. Trade Deficit The U.S. trade deficit unexpectedly narrowed in May to the lowest level in almost a decade as exports jumped while imports of crude oil and auto parts declined, the Commerce Department said separately today in Washington. The Labor Department said prices of goods imported into the U.S. rose in June for a fourth straight month as oil costs jumped by the most in a decade. Employers reduced payrolls by 467,000 last month, more than anticipated, government figures showed. Economists surveyed by Bloomberg this month predicted the unemployment rate will surge to 10 percent by the end of the year, from 9.5 percent in June. Regular unleaded gasoline prices averaged $2.64 a gallon at the pump in June, up 35 cents from the prior month, according to AAA. The price was $2.57 yesterday. Mortgage rates also have edged up, and delinquencies on home-equity loans are rising, recent reports showed. June sales at stores open at least a year declined more than analysts forecast for clothing retailers Gap Inc. and Abercrombie & Fitch Co., reports showed yesterday. Gap, based in San Francisco, operates the Old Navy and Banana Republic chains. Abercrombie, based in New Albany, Ohio, is a teen-clothing retailer TJX Cos., the Framingham, Massachusetts-based owner of the discount chain T.J. Maxx, posted an unexpected increase in sales. To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net Last Updated: July 10, 2009 10:57 EDT
can't argue this one. Anecdotical evidence (in AUS ) is pretty much the same. Looks like printing press and china hope keeps fairytale going for some people a bit longer. Funny, member of upper managemet of large finance company i work for mentioned the other day how he bought new nobrand running shoes for under aud 50 and cant understand why would anyone pay more. I introduced new policy, i never ever again will pay parking fee. Always can park furter and walk. Yes this way of thinking is spreading.......
By Deborah Levine Stock investors will key next on earnings from tech giant Intel Corp. and banks including J.P. Morgan for hints of what to expect in the third quarter -- and how badly the recession hurt businesses in the second quarter... See a detailed analysis www.lovestock.uqc.cn
Last week, according to the United States Department of Labor, the amount of unemployment applications filed dropped by 6,000. That is consistent with other recent reports that indicate a modest growth in the nation's hiring. Source for this article: Personal Finance