U.S. ECONOMY IN GREY AREA
Consumer confidence plunges to 28-year low
WASHINGTON - CONFIDENCE among United States consumers fell this month to the lowest level in 28 years, pointing to slower spending as petrol prices reach record levels and job losses mount.
The Reuters/University of Michigan final index of consumer sentiment decreased to 59.8, the weakest reading since June 1980, from 62.6 last month. The measure averaged 85.6 last year.
Separately, US consumer spending slowed last month as income gains weakened, a sign that the biggest part of the economy could be faltering.
The 0.2 per cent rise in spending followed a 0.4 per cent increase in March, the Commerce Department said yesterday. Incomes grew 0.2 per cent, bolstered in part by the government’s tax rebates, and the Federal Reserve’s preferred measure of inflation moderated.
‘Consumers are spending cautiously,’ said Mr Michael Moran, the chief economist at Daiwa Securities America in New York. ‘The economy is in a grey area between a recession and slow growth. We had a weak performance in wages.’
The report contained good news on inflation for Fed policymakers. The central bankers’ preferred gauge of prices, which excludes food and fuel, rose 0.1 per cent after a 0.2 per cent gain in the previous month. It was up 2.1 per cent from April last year.
BLOOMBERG NEWS
Source : Straits Times - 31 May 2008
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