Fresh reports on spending likely to reflect economic softness
WASHINGTON (MarketWatch) — The U.S. manufacturing sector has contracted, consumers are watching their wallets and lawmakers in the nation’s capital are twiddling their thumbs. http://www.marketwatch.com/story/us-consumers...2012-09-23
Not a recipe for a stronger economy.
The latest batch of economic data is expected to show the U.S. muddling along. Consumers are spending too much on necessities such as gas and big-ticket manufactured goods are no longer flying off the shelves. A modestly improved housing market is not expanding fast enough to offset downward pressures on the nation’s growth, either.
| date | report | Consensus | previous |
|---|---|---|---|
| Sept. 25 | Consumer confidence index | 65.0 | 60.6 |
| Sept. 26 | New home sales | 380,000 | 372,000 |
| Sept. 27 | Weekly jobless claims | 375,000 | 382,000 |
| Sept. 27 | Durable goods orders | -5.3% | 4.1% |
| Sept. 27 | GDP revision | 1.7% | 1.7% |
| Sept. 28 | Personal income | 0.2% | 0.3% |
| Sept. 28 | Consumer spending | 0.5% | 0.4% |
| Sept. 28 | Core PCE price index | 0.1% | 0.0% |
| Sept. 28 | UMich consumer sentiment | 78.9 | 79.2 |
Economists expect those trends to persist to the end of the year. The hope in 2013 is that lackluster global growth will gain more of a shine and that Washington won’t fall off a so-called fiscal cliff by letting big tax increases and spending cuts take effect in January as scheduled.
“Once we get over that at the end of the year, we are clearly expecting some confidence to come back to consumers and businesses,” said Yelena Shulyatyeva, an economist at BNP Paribas.
Cautious consumer
The big report of the week focuses on consumer spending — by far the biggest source of economic growth.
Americans likely increased purchases by 0.5% in August, the Commerce Department is expected to report on Friday. Incomes probably rose by 0.2%, according to economists surveyed by MarketWatch.
The headline, however, may turn out to be deceiving. Gas prices spiked in August and consumers had to shell out more to fill up their tanks. That’s not the kind of spending that helps an economy grow.
Indeed, gas stations last month reported their biggest increase in sales in nearly three years. Stripping out gas, retail spending rose a modest 0.3% in August, with auto purchases accounting for the bulk of sales. Consumers spent the same or less on a wide array of goods.
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