-->>Americans cut spending as tax rebates dry up
>Fri Oct 31, 5:30 PM ET Add Business - AFP to My Yahoo!
>WASHINGTON (AFP) - American consumers cut spending as tax rebates dried up in September, data showed, an early sign that a 19-year record US economic growth spurt must slow.
>Spending fell a steeper-than-expected 0.3 percent in the month as the initial impact of President George W. Bush (news - web sites)'s 350-billion-dollar tax cut package fizzled, the Commerce Department (news - web sites) said.
>Consumer spending is critical because it accounts for two-thirds of US economic activity.
>"But no matter how you dress it up, the September report makes it clear that without the treats given to us by tax cuts and low interest rates, consumers are on their own," Naroff Economic Advisors president Joel Naroff said.
>Growth in the world's biggest economy shot to a 19-year record 7.2 percent pace in the July-September quarter, led by consumers carrying wallets fattened by tax cuts, government figures showed the day before.
>Analysts widely expect the economic growth rate to decelerate to about four percent in the last quarter of 2003.
>Personal income rose 0.3 percent.
>But after-tax disposable income slumped 1.0 percent as the flood of tax refund checks, which landed in people's mail boxes during July and August, dried up in September.
>As a result, people's tax and non-tax payments soared 109.7 billion dollars in September, reversing a slide of 50.3 billion dollars in August and a plunge of 106.6 billion dollars in July.
>"After six months of robust durable goods spending, households took a breather," Naroff said.
>"While personal income rose in September, disposable income, which reflects tax payments, was down sharply," he added."The advance refunding of child tax credits ended, so tax liabilities soared."
>People saved 2.9 percent of their disposable income in September, down from 3.5 percent in August.
>Taking inflation into account, real consumer spending slumped 0.6 percent in September as people's disposable income tumbled by a two-year record of 1.2 percent.
>Real spending on big-ticket durable goods such as cars tumbled 4.6 percent while expenditure on other goods eased 0.4 percent and spending on services edged 0.2 percent lower.
>"Motor vehicle sales came off their lofty heights to more reasonable levels," Naroff said.
>In an encouraging sign for the outlook, a closely watched barometer of American consumer sentiment rose to 89.6 points in October from 87.7 points in September, the University of Michigan said.
>And a survey by the Chicago Purchasing Management Association found business activity in the industrial heartland of the Midwest accelerated in October.
>As the tax cuts fade as a driver of the economy, jobs will be critical to the outlook, analysts say.
>"It will be very difficult to get growing personal income numbers without an increase in employment," Wachovia economist Gina Martin said.
>"The tax cuts helped steer the economy in the third quarter but not it is time for job growth to take the reins."
>US businesses hired 57,000 extra people in September, finally snapping a seven-month run of layoffs, but the jobless rate stagnated at 6.1 percent.
>Unemployment figures for October are out November 7.
|
Thread-Ansicht
Board-Ansicht
Thread gesperrt
