Recession fears grip US consumers
US consumers are increasingly reluctant to spend money
Consumer spending in the US fell in September by the biggest amount in four years, the Commerce Department said.
Personal spending fell by 0.3% last month, despite a rise in incomes of 0.2%, official figures showed.
The drop in expenditure was the biggest since June 2004, and steeper than economists had predicted.
On Thursday, the Commerce Department issued figures showing the US economy shrank at an annualised rate of 0.3% between July and September.
Consumer spending accounts for two-thirds of total US economic activity.
A number of US retailers have reported falls in sales for September, including department store JC Penny, upmarket rival Saks, high street retailer American Eagle Outfitters and online retailer Target Corp.
Low cost retailers Wal-Mart and Costco also failed to meet Wall Street expectations of sales for the month.
A drop in spending had been expected, although not as steep as 0.3%.
Benign inflation
The spending report also showed that consumer inflation edged up 0.1% in September, or 0.2% excluding energy and food costs.
In a separate report, also released on Friday, the US Labour Department said wages and benefits of US workers rose 0.7% in the third quarter, the same increase recorded in the previous two quarters.
Concerns over inflation have abated somewhat prompting the Federal Reserve to seek ways to boost the economy, such as by lowering interest rates to increase borrowing.
On Wednesday, the US Federal Reserve cut its key interest rate from 1.5% to 1%, as widely expected. The relative lack of inflationary pressure in the US economy means the Fed will be able to make further cuts should it wish.
Shaky confidence
Earlier in the week, Conference Board figures showed US consumer confidence at a record low in October, amid falling global stock markets, rising property foreclosures and increasing job losses.
The board said the monthly consumer confidence index fell to 38, down from a revised 61.4 in September and below analysts' expectations of 52.
It was the lowest since the board began tracking consumer sentiment in 1967.
What effect do you believe low consumer sentiment will have on this holiday season and the economy?
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20 comments:
Like the Grinch, Wall Street is in the process of stealing this Christmas and perhaps others. With problems in the economy today how will shopping for Christmas gifts this year change. I believe that many people are not going to bring many bags home with gifts this year. I also believe that it will affect Black Friday because many stores like Wal-mart and JC Penny had failed to meet Wall Street expectations. There is one thing that is certain, our economy is in very deep trouble and the blame has washed up on the shores of Wall Street.
*Clariza Gutierrez*
Well this christmas trust me dont wait for all the presents that you used to get. This christman less people will be shopping and also this thanksgiving. Many people lost their jobs and those that have a job arnt getting well paid . If you dont have enough money for basic stuff dont go and spend that extra money that you could use in something else. Dont go out and waste money in presents. Still today people are being fired from their jobs. Stores like k-mart, sears, ext will no be having a black friday this year and if they do not many people will be buying stuff like they used a year ago.
:) ERIKA GERMAN:)
I BELIEVE THINGS WILL CHANGE NOT EVERYONE WILL GET WHAT THEY HAD BEFORE. MANY PEOPLE LOST THEIR JOBS AND WONT BE ABLE TO PROVIDE THE SAME. WILL HAVE TO DO THE BEST THIS YEAR TO HAVE GOOD HOLIDAYS. AND GET CHEPER PRESENTS. WITH THE PROBLEM OF THE ECONOMY THEIR WILL BE LESS SHOPPERS. EVERYONE WILL HAVE TO THEIR BEST AND WORK WITH WHAT THEY HAVE.
JEFFREY CORTES
Due to the deep trouble that the economy is in, this holiday season won't be as good as the past few years. Since the economy is going downhill there are businesses that are raising their prices in which consumers can not afford at the moment. This Christmas is going to be one sad christmas. Many companies fail to meet their seasonal goals. Meaning they won't gain any money because not many people are going to buy things due to the shortage in money. This Economy is Screwing people up big time. From small families to big Corprate companies. Something has to be done to fix this all up, and Fast!!!
-Yaniry Ortiz
This holiday season alot of people are not goiong to spend too much money. Because of this a lot of stores will lose out. People are limiting there spendings out of fear. Only a fool would expect to make alot of money from shoppers this season.
delores quinones
This holiday season alot of people are not goiong to spend too much money. Because of this a lot of stores will lose out. People are limiting there spendings out of fear. Only a fool would expect to make alot of money from shoppers this season.
delores quinones
Remember getting up every christmas morning and seeing all the presents under the tree. This may not be the case this year. The way the economy is looking, there is a chance that people arn't going to be bringing home shopping bags. There are going to be places that may raise their prices and people wouldn't bother buying their products. So dont expect a fun fill holiday
Janeel Harford
I believe that consumer setiment will certainly have a great impact on these up and coming holidays. To consumers the prices of everything will be sky rocketed and because we are in a recession and it will be harder for people to spend.In order to get out of a recession, money has to be spent. how can money be spent if we have no money to spend? This christmas will definitely be like one we've never seen, however around the beginning of the new year everyone will recieve their tax return and that christmas can be made up for.Wall street will definitely be looking for another down fall. With the change in presidency, that should change it all.
~Desteny Bodrick~
I think that because people are loosing their jobs, people obviously wont have the money to buy gifts. Children wont have as many gifts as they had the previous year. The economy is doing bad and so will store profits. In my opinion Christmas isn't about gifts, its about being with your family and showing each other the love you have for one another. Getting a gift on Christmas morning is just a bonus. But i personally would be perfectly fine with just a big hug and a kiss and a "Merry Christmas".
RAYSA ROJAS*
dfff
All Americans have been watching closely the way the economy is breaking into a recession.Many people are loosing there jobs.homes and banks are filing for bankruptcy.Many are fearing for the worst to come.seeing that everyday they read in the newspapers or watch on the news that wall street has once again had a major loss.Receiving 401k's seeing that there retirement mney has been decreased by hundreds or even thousands of dollars for some.Not putting so much trust in to the economy many are starting to save more than spend,even though the government is urging many to go out and do so.Trying everything in there power to give people money to restore spending habits many are saving the money instead.I believe this holiday there isn't going to be a big turn up of consumers and the ones that do show up aren't going to buy as much gifts as they use too.The economy may have a slight boost because of the increased spending for the holidays but it is not going to be enough at all.The economy will continue failing into a bad shape and will not get back on it's feet anytime soon.People are getting different information daily that things are going to get worst.This causing many to reconsider if they should do any holiday spending at all, but we will see how this holiday goes for we can only base things on statistics until christmas arrives.
Sharmalee Budhai aka Princess
I think that the effect will be harsh. Many people want to buy thing for their children and now they cant. Many people are loosing their jobs because of the wall street decreas and the stores are not reaching the standars.Also if people are lossong their jobs then they woudlnt have money to buy presents. Like Raysa said Christmas is for a family get together not always about present.
GINA LOPEZ
I agree with G-Money (GINA). Like she said people wont be able to buy presents. Also if people cant buy presents stoes wont get as much money. This will effect Christmas because people will be disapointed because they would not get what they want. I dont think this is fair to the hard working people nad the people in need.
FELIX LOPEZ
Sharmalee OD'ed!..
I think this christmas is going to be one of the most saddest Christmas' ever. People just arent spending as much as they used to. And I believe that all this talk about the economy being low is affecting the way people spend their money. I think that the more the media talks about how low the economy is, the less people will buy. So this december is definately not going to meet Wall Streets expectations.
-Rony
This sucks. I'm not giving my little cousins expensive barbies nor cool firetruck toys from that good toysRus brand. I agree with my buddy up there, rony. stores cant expect much if people aren't going to buy anything. Seriously my mom stay on UNIVISION and the other day told me she's going to stop buying hotdogs .. thats a damn CRISIS. they're a dollar sheesh she's being cheap. Many are losing jobs and not being hired. Hopefully Obama makes a change and by the time I want to start a career this crisis would be far gone.
PS. everyone should definitely be in stores for black friday!! .. haha imagine they cancel that..
- clelia MEH-LOW. :)
ADINA WILKS!!
Well in short this Christmas will pretty much suck.Because of the state the economy people will not only not want to spend money this year but they wil probably be scared to. Since consumer purchases accounts for a large amount of U.S economy this holiday sason will most likey cripple the economy even further.
Baah Humbug!
I agree with clariza because now a days people are afraid to spend there money which is one of the reasons why stores like walmart and JCpenny are'nt making any money.I guess christmas as we know it is gone hardly anyone is goin 2 go buy gifts this year.Everyone is basicallly trying to save there money in case this counrty enters a great depression.
since many people got laid off its kinda hard for them to afford to do chirstmad shopping.our economy is crashing rapidly we seriously need help in reparing it.
Jenneth phillip
What effect do you believe low consumer sentiment will have on this holiday season and the economy?
The economy is going downhill and its going to cause most of us a bad Christmas. Some people are losing their jobs and wont be able to spent money on gifts. The prices on gifts will most likely increase and most consumers would not purchase them. Many children are going to be disappointed when Christmas comes along because parents will have to save money just in case things get worst. This Christmas is not going to be like every other one we had.
Charlene Vega
Do to the economy's change this holiday would not be the best for everyone thats why there are lots of sales going on in order for those who wouldn't have the chance to buy there friends and family what they want this is the time now.Also know that this recession has been going on things are going to get more and more higher.
Well christmas this year its going to be so so jus because some kids wouldnt get that many gifts which i believe it would be a disappointment to them...and christmas is a holiday where like family come together to spend some time its really not about gifts its the day god was born and its a special holiday. For black friday the prizes are going to be very low & probably they'll be able to have more presents because the prices on some stuff are going to be lower due to the economy. Hopefully black friday would help the economy.
Jennifer Silver
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