The following is an excerpt from Lorraine Woellert | September 23, 2012 | Bloomberg.com |
Consumer spending in the U.S. probably stagnated in August after adjusting for inflation, showing the expansion is struggling to gain momentum, economists said before a report this week.
Household purchases, which account for about 70 percent of the economy, rose 0.5 percent last month after a 0.4 percent increase in July, according to the median estimate of 63 economists surveyed by Bloomberg ahead of Sept. 28 figures from the Commerce Department. The report may show the gain reflected a 0.5 percent jump in prices, the biggest since June 2009.
A slackening job market and rising gasoline prices are squeezing household finances just as concern mounts that lawmakers may not be able to avoid the fiscal cliff of tax increases and spending cuts slated to take effect next year. Other reports this week may show business investment is also cooling, while housing is on the mend after a six-year slump.
“The U.S. economy is clearly in a soft patch right now that could deteriorate into a stall,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “Consumer spending is really driven by jobs and wealth effects and the consumer’s ability to borrow. All of those things are still suggesting moderate growth.”
Consumer caution is rippling through retailers, restaurants and their supply chains, with railroads and cargo companies including Norfolk Southern Corp. (NSC), FedEx Corp. (FDX) and United Parcel Service Inc. reporting slowing global demand.
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