NYT (AP): U.S. Consumer Spending Fell Unexpectedly in August

[highplainsdem]

http://www.nytimes.com/aponline/business/30WIRE-INCOME.html


U.S. Consumer Spending Fell Unexpectedly in August
By THE ASSOCIATED PRESS
Published: September 30, 2005
Filed at 10:22 a.m. ET

WASHINGTON (AP) -- Hurricane Katrina caused $100 billion in uninsured losses in August while consumer spending plunged by the largest amount since the September 2001 terrorist attacks, the government reported Friday.

<snip>

In another worrisome sign for the economy, consumer spending, after adjusting for inflation, plunged by 1 percent in August, the biggest decline since September 2001, as consumers pinched by soaring gasoline prices cut back in spending in other areas.

The sharp drop in spending raises concerns about consumers' staying power in the face of soaring energy bills. Consumer spending is closely watched because it accounts for two-thirds of the economy.

<snip>

The worry is whether the surge in energy prices, partly reflecting the shutdown in production along the Gulf Coast, will so rattle consumers that the economy could be pushed into a full-blown recession. The Conference Board reported a sharp drop in consumer confidence in September.

<snip>

[thinkingwoman]

1. unexpectedly? BAH!!!!

Morons! I could have told them spending would fall with gas prices so high.

Idiots. All of them. :eyes:

[Pirate Smile]

3. Right. How could this be unexpected? Who are these idiot "experts"?

If you are paying $3 per gallon for gas, something's got to give.

[AllyCat]

2. Because we have no money!!

Unemployment, underemployment, no health care, rising fuel prices in a non-public transit kind of world. All makes for a pretty tough row to hoe.

[Deja Q]

16. They know that. THAT is why they are saving up.

When the cash comes, the top 1% will be around.

We will not.

Enjoy life while it lasts.

And, don't worry, the way THEY have fucked up our planet, there will come a point where it is better to be dead.

[havocmom]

4. If anaylists failed to guess consumer spending would fall,

we definately do not need to let the robber barons running things get their greedy paws on the Social Security Payroll taxes. They are all dumber than posts... or think we are!

Shit, anybody with fair skills at observation and logic could get it right!

[Horse with no Name]

5. Hmmm sounds to me like this would be a lightbulb moment

Gas is close to $3 a gallon.
My electric bill was close to $700 last month and everyone I know in our area had similar bills.
WTF do they think we are going to buy stuff with?

[alarimer]

11. mine was almost $200

for a one-bedroom apartment. Granted I do live in a place that is well over 90 degrees for most of the summer but I have never had a bill like that before. That's money that isn'tbeing spent on other things.

[Horse with no Name]

12. I personally think that ever since Texas was deregulated

that our prices have continued to spiral upward.
This time last year my bills were about $400-500 which I thought were outrageous, this is bordering on insanity.
I have a 4 bdrm home...and will downsize.
My daughter graduates in May and will be going off to college, but seems like we will just need to squeeze into something smaller and more economical before our projected time frame.

[ProfessorGAC]

6. Unexpected By Whom?

Nearly everyone in the econ community thought that spending would go down, as people feared even higher gas prices.

One interesting note: The term "full blown recession". There is finally some admission amongst gov't and investment economists that this economy is not in good shape. For us to go into a "full blown" recession, that would indicate they are admitting it's either near recessionary or is in a recession, but based upon statistical averages and not an arbitrary definition.
The Professor

[insane_cratic_gal]

7. thank you for saying it!

Unexpected.. how is this shit unexpected by any one?

When the service industry that pays on average 6.00 an hr is the top of the economical force of our economy, how is people not being able to afford shit not foreseeable?
:eyes:

[Ikonoklast]

8. Are these people professional idiots?

You ain't seen nothin' yet. Look to the huge increase in heating costs that are about to roll over our economy like the tsunami in the next few months, let alone the increasing costs for transportation. Consumer spending for the holidays (which makes retailers whole year) will plummet.
A blind man can see what's coming our way. The Bush Recession.

[Hello_Kitty]

9. I know MY consumer spending has fallen all year

The credit card companies can kiss my ass!

[prolesunited]

10. They are just out of touch with reality

The so-called experts have plenty of money. When they pay $3 at the pump, it's just something to groan about, it doesn't mean changing plans or re-arranging their lives. Think how much people in rural areas with no public transportation are paying to get to their jobs.

A sky-high electric bill? No problem, just one less evening out that week. It doesn't mean adjusting the thermostat or leaving the house.

They have no clue as to how the majority of Americans are living.

The good news is we have more millionaires, so the economy must be great. Right?

[marions ghost]

13. I had to go shopping the other day...

I don't shop for recreation (except for bookstore browsing) and I find everyday essentials shopping so boring that I will put off even going to the grocery store. But anyway I had to go the other day, trying as usual to consolidate the stops and conserve gas.

What I did notice as I popped in and out of a few stores was that there were almost no customers at a time later in the day when you'd expect them to be there. There were a lot of sales and discounted merchandise. There was no problem finding parking spaces. There were no checkout lines. Since I don't shop much it was very obvious to me that the numbers have dropped off. I'm thinking this reflects the 'drop in consumer confidence' you are talking about....has anyone else noticed this drop-off in your community?

questions for economic heads:
What happens when consumers have no 'staying power' in the face of soaring costs? Has consumer spending always accounted for 2/3 of the US economy? Is that too risky? Is this drop-off in consumer spending really capable of crashing the economy, or will we just wallow through a period of stagflation?

[Deja Q]

15. Last month the ikea store was JAMMED. Even during the weekday.

People buying that slop.

But, yeah, I'm seeing LOTS MORE in the way of big sales. Something's not good.

Still, it was inevitable.

[marions ghost]

18. IKEA's prices are lower ...

they'll probably do OK in recessionary times. Any store that is geared to bargain hunters will still get the biz.(Also a lot of students are buying things for their dorms and apartments in September, so that might be a temporary fall phenom). I bet the 'regular' furniture stores are hurting though. And clothes...I don't plan to buy any new clothing item this year. Christmas will be minimal.

[Deja Q]

14. 1% - big deal. Still, when people make a society where they do not put

care or effort into their own or the energy they use, 2006 will be the end result.

[qanda]

17. I just don't get it

Are these people that disconnected from the real world? Everyone I know is struggling to make it. Healthcare costs, gas, electric bills, telephone, food, insurance, basic needs, housing and unexpected expenses are killing the average person. Why is this a surprise? The surprise to me is that it isn't even lower.