US Economy: Outlook Remains Cloudy

29 October 2002

Several new reports strengthen fears that the US economy faces further tough times before sustained recovery.

The monthly consumer sentiment index produced by the University of Michigan tumbled to 80.6 in October, down from 86.1 the month before. Attributed to falling stock prices, this is the confidence barometer’s lowest reading since 1993.

One sector that has done well recently is the auto industry, thanks to a host of cheap financing deals. Indeed, 71% of respondents in the University of Michigan survey believe it is a good time to buy a car.

However, executives in the auto sector expect October sales to be down by as much as one-third on the equivalent month last year, adding to the uncertainty over what the American consumer will do next.

What is more, new figures from the Commerce Department show that new orders for durable goods – those built to last more than three years – slumped 5.9% in September compared with the previous month.

The housing sector, however, remains a bright spot. New home sales edged up 0.4% last month, according to the Commerce Department, to a record annualized rate of 1.021 million units.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff