U.S. Consumer Spending, Incomes Probably Improved in October
Last Updated on Tuesday, 30 November 1999 05:00
From International Desk -
Consumer spending probably rebounded in October, an indication that mounting unemployment has yet to stifle Americans’ willingness to buy. Purchases increased 0.5 percent after dropping by the same amount in September, according to the median estimate of 75 economists surveyed by Bloomberg News. Other figures may show orders for durable goods and home sales climbed. Uneven gains in spending signal consumers are unlikely to provide sustained support to the U.S. economy as it emerges from the worst recession since the 1930s. A jobless rate that is projected to exceed 10 percent through the first half of next year means households will contribute less to growth. “Consumers have only minimally loosened their purse strings over the past several months,” said Chris Low, chief economist at FTN Financial in New York. “But the economy is very much on track.” The Commerce Department’s spending report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from no change to a gain of 0.8 percent. The report may also show incomes rose 0.1 percent last month after no change in September, according to the survey median. Estimates ranged from a decline of 0.2 percent to a gain of 0.4 percent. Americans bought more vehicles in October even after the government’s trade-in program known as “cash for clunkers” expired in August. Auto industry data showed sales of cars and light trucks rose to a 10.5 million unit annual pace last month, up 14 percent from September. Purchases were still short of the 14.1 million rate reached in August.
“Things are solidly looking up,” Susan Docherty, head of U.S. sales at General Motors Co., said in a Nov. 19 conference call with reporters. She said sales this month at Detroit-based GM, the biggest domestic automaker, are set to rise 10 percent to 15 percent from a year earlier. Sales at U.S. retailers increased 1.4 percent last month after a decline of 2.3 percent in September, according to Commerce Department figures released Nov. 16. Department stores, restaurants and Internet-based businesses such as Amazon.com, the world’s largest online retailer, were among areas that showed improved demand. Concern over mounting job losses is restraining spending. Payrolls fell by 190,000 last month, bringing total job losses to 7.3 million since the recession began in December 2007, the most of any contraction since the Great Depression.
Job cuts and stock-market gains are causing measures of consumers’ outlooks to diverge this month. The Conference Board’s confidence index rose in November, while the Reuters/University of Michigan gauge, due at 10 a.m. today, is projected to drop from the previous month. The Standard & Poor’s 500 Index is up 63 percent since hitting a 12-year low in early March. Another report from the Commerce Department, also due at 8:30 a.m., is forecast to show orders for durable goods, those meant to last at least three years, probably rose 0.5 percent in October after a 1.4 percent rise, the first back-to-back increase since May, according to the median survey estimate. The increase in demand for automobiles likely contributed to a gain in bookings at factories, economists said. Excluding demand for transportation equipment, which tends to be volatile, orders probably increased 0.6 percent, the survey median showed. The worst housing slump in more than 70 years is showing signs of easing, due in large part to government support in the form of homebuyer tax credits, economists say. A Commerce Department report at 10 a.m. may show purchases of new houses rose 0.5 percent last month to a 404,000 annual pace, according to the Bloomberg survey median. The National Association of Realtors this week said sales of existing homes rose 10.1 percent in October to an annual pace of 6.1 million, the highest level since February 2007.