US Economy: Growth Up, Confidence Down

30 September 2003

Mixed signals for the US economy, as a worse-than-expected drop in consumer confidence scraped the gloss from an upward revision to GDP growth.

Economists were pleasantly surprised by new figures showing that the economy expanded at an annualised rate of 3.3% in the second quarter, higher than previous estimates of 3.1%.

Durable-goods spend rose more rapidly than previously thought, jumping 24.3%, while expenditure on home building was also revised upwards.

However, hopes that the economy can hit growth rates of 4% in the second half of 2003 were dampened by the latest consumer confidence survey from the University of Michigan. The sentiment index fell to 87.7 in late September, down from 89.3 in August and lower than the 88.5 forecast by analysts.

The drop reflects increasing pessimism about the economic climate both now and in the future. The index measuring attitudes towards the current situation slipped from 99.7 in August to 98.4, while the barometer of consumer expectations tumbled from 82.5 to 80.8.

Data sourced from: multiple sources; additional content by WARC staff