Source: bloomberg.com
Americans remain very nervous about the U.S. economy notwithstanding the news that the economic recovery is underway.
The Reuters/University of Michigan index of consumer sentiment decreased to 69.4 from 73.5 in September. Also, falling were expectations for six months ahead and current conditions. By contrast, the index averaged 87.3 in the 12 months leadnig up to December 2007, when the recession began.
With unemployment at the highest level in 26 years and likely to top 10 % before year end, this is certain to constrain consumer spending in the U.S. over the Christmas holiday season. It certain states, the rate of joblessness is already hitting 11 percent, as is the case in Florida.
Meanwhile, the Obama administration and the Federal Reserve remain concerned that rising unemployment will continue to be a drag on consumer spending, thus making for a very weak recovery.
“This is probably giving us a more accurate reading of what consumers are feeling,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who had the lowest forecast in the Bloomberg News survey. “They’re very concerned about how long unemployment is going to stay high, and they’ve very concerned about their own personal finances.”
