The US economic recovery is still in doubt, with analysts' estimates for consumer spending in August coming in flat after adjusting for inflation.
This Website Is For Financial Professionals Only
Household expenditures make up 70% of the growth in gross domestic product (GDP). Analysts and economists surveyed by Bloomberg estimate ahead of the September 28 report that expenditures rose .4% in July and .5% in August.
They also estimate that prices rose .5%. That’s the biggest price jump since June 2009.
Increases in gasoline prices along with continued softness in the jobs market are putting pressure on consumers just as the fiscal cliff is gaining momentum.
Caution by consumers is rippling through the retail sector to restaurants and supply chains, causing a slowdown in global demand.
The upcoming Commerce Department report is also expect to show that incomes fell from up .3% in July to only up .2% in August.
The housing sector and auto sales are experiencing the strongest growth but spending outside of those areas remains weak.
The slowness in the global economy is affecting the manufacturing sector, which was seen as a pillar of the economic recovery.
Growth in wind power was fueling a large part of this growth but demand is slowing significantly in the wind power industry. It’s expected that Siemans AG will soon eliminate 615 jobs in its wind-energy division.
Economists are blaming the recovery's inability to build steam on concerns about the fiscal cliff
as it grows nearer and Congress has recessed until after the election. The recovery so far this year seems to see flashes of hope in various sectors, only to be dashed later by global economic uncertainties.