More conflicting data this week on the US economy.
Consumer spending – which represents around 66% of all US economic activity – braked by 1.2% in September due a 4.8% falloff in car sales. The latter excluded, consumer expenditure rose a marginal 0.1%, just on the red side of economists’ expectations.
The trend, some onlookers believe, reflects public fears about the economic effects of a possible US attack on Iraq and the present volatility of stock markets.
For once, however, the financial markets chose to think positive, interpreting the data as evidence that the non-automotive sector is stabilizing. “That tells us the US economy is not showing further signs of erosion,” opined Joseph Battipaglia, chief investment officer of research firm Ryan Beck. “Consumers, despite some concerns about the war with Iraq, are going about their normal business.”
Reinforcing this belief, sales of building and garden supplies rose 1.8%, on top of a 0.7% gain in August. Health and beauty products also increased 1.5%, up from a 0.6% increase. And for the second successive month sales at sporting goods, books and music outlets grew 1.5%.
But other data in the US Commerce Department’s monthly report indicates that it is not only in the automobile sector that there has been a weakening in consumer spending …
• Furniture and home furnishing stores fell 0.5% in September, a turnaround from a 0.8% advance the month before.
• At clothing stores, sales fell 0.9% in September, after a 0.3% rise. Electronics and appliances stores saw sales dip 0.3%, erasing a 0.3% gain in August.
• Leisurewise, sales at bars and restaurants were down 0.4%, following a 0.2% increase; while at food stores they fell 0.4%, doubling August’s 0.2% decline.
• General merchandise stores, including department stores, saw sales inch down 0.1%, following a 0.5% increase. But sales at gasoline stations held their own after falling 0.7% in August.
The consensus among the entrail-rakers seems to be that the economy gained momentum in the third quarter, growing at a rate of at least 3%. A smaller number of seers believe, however, that this pace will be maintained through the current quarter.
Data sourced from: USA Today; additional content by WARC staff