Consumers give spark of new hope
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The Associated Press
Oluşturulma Tarihi: Mayıs 01, 2009 00:00
WASHINGTON -Americans stepped up purchases. The surge in consumer spending could set the stage for a rebound. Hopes for revival depend on those consumers who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings
American consumers are snapping back to life, kindling springtime hopes that the recession is losing steam.
Even though the U.S. economy shrank again in the first three months of the year - and by a lot - Americans stepped up their purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Hopes for revival depend on those consumers, who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings. If they keep buying, businesses will need to boost production, feeding yet more economic activity.
Against that backdrop, many analysts think the economy is sinking less now than it did from January through March. Most believe it could start growing again by summer or, more likely, by the final quarter of this year. The American consumer is still a wild card in any recovery scenario. Though the Federal Reserve noted that spending "has shown signs of stabilizing," it also said people's buying is still constrained by rising unemployment, falling home values and hard-to-get credit.
Those negative forces - or the emergence of new ones, like the swine flu outbreak - could cause consumers to do an about-face and ratchet back spending, throwing the economy into another tailspin.
The economy logged a worse-than-expected 6.1 percent annualized drop in the first three months of the year despite the rebound by consumers, the Commerce Department reported. The culprits behind the poor overall performance: sharp cutbacks by businesses, especially in inventories of unsold goods, and the biggest drop in U.S. exports in 40 years.
The bleak picture underscores the damage caused by the housing, credit and financial crises - the worst since the 1930s. The recession, which began in December 2007, has battered the national economy and wiped out a net total of 5.1 million jobs.
The economy totaled $11.3 trillion at an annual rate in the first quarter, compared with $11.7 trillion in the second quarter of 2008.
Still, consumers roared back in the first quarter of this year. They boosted their spending at an annual rate of 2.2 percent, the most in two years. Gains in disposable income helped by tax refunds and government benefit checks like Social Security helped allow the spending gains.
Much stronger demand for long-lasting "durable" goods, including cars, furniture and household appliances, led the increase. That spending rose at a 9.4 percent pace, the most in a year.
Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. One exception was food, on which spending dipped slightly.
Americans' higher consumption, though, was swamped by deep spending cuts in virtually every other area of the economy. Businesses cut back on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers sank in the face of economic troubles abroad. Even the government trimmed spending. It was the first time that's happened since the end of 2005.
Even though the U.S. economy shrank again in the first three months of the year - and by a lot - Americans stepped up their purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Hopes for revival depend on those consumers, who have been fortified by fatter paychecks from tax cuts and smaller mortgage payments from refinancings. If they keep buying, businesses will need to boost production, feeding yet more economic activity.
Against that backdrop, many analysts think the economy is sinking less now than it did from January through March. Most believe it could start growing again by summer or, more likely, by the final quarter of this year. The American consumer is still a wild card in any recovery scenario. Though the Federal Reserve noted that spending "has shown signs of stabilizing," it also said people's buying is still constrained by rising unemployment, falling home values and hard-to-get credit.
Those negative forces - or the emergence of new ones, like the swine flu outbreak - could cause consumers to do an about-face and ratchet back spending, throwing the economy into another tailspin.
The economy logged a worse-than-expected 6.1 percent annualized drop in the first three months of the year despite the rebound by consumers, the Commerce Department reported. The culprits behind the poor overall performance: sharp cutbacks by businesses, especially in inventories of unsold goods, and the biggest drop in U.S. exports in 40 years.
The bleak picture underscores the damage caused by the housing, credit and financial crises - the worst since the 1930s. The recession, which began in December 2007, has battered the national economy and wiped out a net total of 5.1 million jobs.
The economy totaled $11.3 trillion at an annual rate in the first quarter, compared with $11.7 trillion in the second quarter of 2008.
Still, consumers roared back in the first quarter of this year. They boosted their spending at an annual rate of 2.2 percent, the most in two years. Gains in disposable income helped by tax refunds and government benefit checks like Social Security helped allow the spending gains.
Much stronger demand for long-lasting "durable" goods, including cars, furniture and household appliances, led the increase. That spending rose at a 9.4 percent pace, the most in a year.
Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. One exception was food, on which spending dipped slightly.
Americans' higher consumption, though, was swamped by deep spending cuts in virtually every other area of the economy. Businesses cut back on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers sank in the face of economic troubles abroad. Even the government trimmed spending. It was the first time that's happened since the end of 2005.