Naseer Jamot (right) and his daughter Fatima shopped for groceries at a Target store in Philadelphia this week. US consumer sentiment fell unexpectedly this month, according to a new report released Oct. 16.
(Matt Rourke/AP)Photos (1 of 1)
US consumer sentiment falls as world’s outlook brightens
By Laurent Belsie | 10.16.09
Australians are cheery. Europeans are on the mend. The Japanese? Recovering.
Americans, however, are sliding back into pessimism, according to the Reuters/University of Michigan Surveys of Consumers. Consumer sentiment fell unexpectedly from 73.5 in September to 69.4 in October. That retraced a bit of the index’s run-up since late last year.
Of more concern is the surveys’ economic outlook index, which fell from 73.5 in September to 67.6 this month. “It has the closest relationship with spending,” warned Paul Dales, an economist with Capital Economics, in a written analysis. It suggests that instead of spending increasing at a 3.5 percent annual clip during the third quarter, it might only rise 1 percent, he added.
This slow-growth pessimism is increasingly at odds with what is happening in other parts of the world. In Australia, the Westpac-Melbourne Institute reported Wednesday that its index of consumer sentiment rose 1.7 percent in October, just barely below its 2007 peak.
In Japan, consumer confidence in September rose for the ninth month in a row, according to a Japanese government survey also released on Wednesday. The last reading from the European Union, in late September, showed a rise for the sixth month in a row (albeit at a slower pace than earlier in the year).
So what’s eating Americans, who are normally an optimistic bunch? Job losses and large debts play a role.
“The survey indicates that consumers have become more confident about the overall economy, but they are still very worried about their own financial conditions,” wrote Nigel Gault, chief US economist at IHS Global Insight, in his analysis. He forecasts consumer spending next year will rise 1.5 percent next year, better than this year’s projected 0.7 percent decline.
But it’s still a weak and gloomy outlook for an economy that needs robust consumer spending to begin firing on all cylinders.
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Comments
2. Mr Pepper | 10.17.09
I believe the employment picture, with the ongoing personal debt burden running a close second place, has dampened sentiment somewhat in the US compared with other countries. Also, these other countries provide more robust and generous social safetly nets, and this weighs on many peoples minds. I also sense there is a feeling among many US consumers that this will be a jobless recovery, and this is acting to subdue confidence. It really is time tha the rest of the world picked up the consumer baton, and I think it will. The US must boost its export potential. Also, I sense a reluctance among lawmakers and the FED to introduce a second stimulus package, which some in the private sector, and economists, are advocating. I believe this administration, rightly, sees the need for the economy to heal itself, and thus engender the resotative powers without further intervention from the likes of the FED. - Presently, it remains a matter of time for a meaningful recovery.
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1. TJ Smith | 10.17.09
I think US consumers are worried about:
1. Unemployment: since the cheerful news that job losses slowed, they were still disappearing at a far faster rate than new jobs are occurring.
2. Credit Debt: Our government continues to operate on credit and continues to encourage credit spending, while banks (that were bailed out by the taxpayers) continue to raise rates and charge fees that all but guarantee that the average american will not be able to reduce their personal debt.
3. Our government is far too focused on health care bills over job creation.
4. Big business gets bailed out while average Americans face lower wages, job losses and higher taxes. It’s ridiculous.