news.yahoo.com/s/nm/20050916/bs_nm/economy_consumers_dc
Reuters Consumer sentiment slumps after Katrina By Ros Krasny Fri Sep 16,12:07 PM ET CHICAGO (Reuters) - US consumer confidence plummeted to a 13-year low i n early September, battered by record high gasoline prices and the full force of Hurricane Katrina, a report showed on Friday.
Separate data showed the US current account deficit, the broadest measu re of US trade with the rest of the world, narrowed in the second quar ter but remained at levels seen as unsustainable over the long term. The current conditions dropped to the lowest level since December 2003 wh ile the expectations index plummeted to the lowest since February 1992. "If these declines were part of the normal economic cycle we would now ca ll for a recession in the United States. the index is r esponding to a shock, and we expect it quickly to rebound," said Ian She pherdson, chief US economist at High Frequency Economics. The result was similar to trends in other consumer surveys as well as a s tring of major polls showing waning support for the Bush administration' s economic policies. "I think there's probably also a degree of loss of confidence in the gove rnment," said David Sloan, economist at 4CAST Ltd. Analysts said the Michigan index suggested consumers, after months of sto icism in the face of rising gasoline prices, have reached a tipping poin t For some Americans, gas prices well over $3 per gallon in some areas threatens the sustainability of the suburban SUV-shopping mall lifestyle . Moreover, disturbing images from the aftermath of Hurricane Katrina revea led broad social and economic inequalities in the United States, adding to concern about the nation's direction. "It really does reflect the enormous amount of coverage of the Katrina di saster," said John Shin, economist at Lehman Brothers in New York. Analysts note that consumers often sing the blues but rarely cut spending as a result -- the link between sentiment and spending is tenuous. Stil l, the latest drop in confidence was termed a worry for retailers. "We expect a couple of very rough months for consumers spending," Shepher dson said. US financial markets showed little response to the report, which had be en telegraphed by other indicators this week. The stock market posted mo derate gains while US Treasury securities yields rose on worries about inflation.
"Despite the fact that you had a narrowing on the quarter based on the fi rst quarter being revised wider, the outlook really isn't that positive, " Sophia Drossos, G10 currency strategist at Morgan Stanley in New York. The quarterly current account deficit ran at 63 percent of gross domesti c product in the second quarter compared with 65 percent in the previou s three months.
Federal Reserve officials have warned that such levels are unsustainable over the long ru n and represent a serious imbalance in the US economy. The deficit partly reflects high levels of US consumption but an extrem ely low savings rate. "The trade deficit remains the single most important tax on US growth a nd burden on American workers," said Peter Morici, professor of internat ional business at the University of Maryland in College Park, Maryland. The dollar has been plagued in recent years by concerns over the current account deficit, although it has appreciated from lows hit last year and has been steady in recent months.
com Find, compare and buy products in categories ranging from Gps Accessories to Misc. Read product reviews and compare prices with tax and shipping from thousands of online stores.
Check-out lines form at a Costco in northern New Jersey, December 24 2004. Consumer sentiment plunged in early September as the fallout from Hurricane Katrina made Americans nervous about an economic slowdown, a r eport said on Friday.
Republication or r edistribution of Reuters content is expressly prohibited without the pri or written consent of Reuters. Reuters shall not be liable for any error s or delays in the content, or for any actions taken in reliance thereon .
|
http://csua.com/feed/