Consumer Spending Drop Biggest Since 9/11

[russian33]

WASHINGTON (Reuters) - U.S. consumer spending in June took its biggest plunge since September 2001 as shoppers, sapped by high energy costs, cut back sharply on car purchases, a government report showed on Tuesday.

Personal spending dropped 0.7 percent in June after climbing 1 percent in May, according to Commerce Department (news - web sites) data. Wall Street had braced for a mild 0.1 percent drop.

Adjusted for inflation, spending tumbled 0.9 percent.

By both measures, it was the biggest drop in consumer spending since September 2001, when shoppers retrenched in the wake of the attacks on New York and Washington.

http://story.news.yahoo.com/news?tmpl=story&cid=580&e=1&u=/nm/20040803/bs_nm/economy_dc



I thought we rounded the corner? I guess when we rounded the corner, we fell into a big ass ditch?

[yardwork]

1. LOL! We rounded the corner into a dark alley

[Jacobin]

2. Gee!! There was another recession around Smirk's corner!!!!

"Results".....isn't that what he has been campaigning on? Are his speech writers pulling a fast one on him? Or, is he going for irony?

[ParisFrance]

3. People must hold on to their cash

They cannot spend freely on the little things anymore.

[JDPriestly]

4. I read that industry is expanding capacity.

Is that true? If so, doesn't that suggest that we will have deflation since consumers have no money to spend and can't buy the products being produced. Won't that mean excess inventory that can't be sold? Correct me if I'm wrong, please.

My mother told me that the problem in the 1930s was overproduction caused by the concentration of wealth in the pockets of the rich, not in the hands of consumers. For example, farmers produced food, but laborers could not buy it because they were unemployed or underemployed and had no money. Is history going to repeat itself?

[oscar111]

5. Spend, u only help bush

if you buy bigticket items now, you will be helping uptick the economy, and so re-elect bush.

The painful part of this insight, is that dems cannot make use of this insight .

If we dems were to officially launch an effort to cause a recession now, the public would be enraged and take revenge on us dems.

So this is an insight we cannot use.

Most frustrating!

However, this news report of a spontaneous downturn of spending, has two facets... bad for the economy, and bad for bush. In the long run, what is bad for bush , will help the long term economy.