Consumer reluctance could hurt economy
USA Today
Battered by a worsening job market, heavy debts and a turbulent stock market, Americans are gradually scaling back their spending, which poses a threat to the nation's longest-running economic expansion. At the same time, though, a new survey finds consumers more confident about how the economy will perform during the next six months, which suggests spending could hold up long enough to help the economy stage a rebound.
As they have for months, the data released yesterday painted a confused picture of the slumping economy:
• Spending and income. Commerce Department numbers for April showed that Americans' income grew a modest 0.3 percent in April while spending grew 0.4 percent, as consumers pulled back sharply on car purchases. After subtracting inflation, though, spending grew just 0.2 percent.
If that pace continues in May and June, overall spending for the April-June quarter would increase at an annual rate of just 1.8 percent — significantly less than the nearly 3 percent rate recorded in October through March.
•Consumer confidence. While the Conference Board reported an unexpectedly strong bounce in its consumer confidence index in May, to 115.5 from 109.9 in April (1985 equals 100), the business group's study also showed increasing worry about jobs, as the number reporting jobs "hard to get" rose slightly to 14.7 percent from 14.2 percent.
The overall confidence rating jumped thanks chiefly to an increase in confidence about how the economy will perform the next six months.
