Consumers hold tight to wallets
The American consumer is scared stiff.
New economic data show consumers were not tempted last month by retailers offering deep discounts. They were not enticed by lower home prices.
And even however falling gas prices made their wallets a moderate fatter, they held on to their newfound savings and put not on buying big-ticket items such as autos and home resources.
“What consumers are not spending on elastic fluid, they are not taking to the mall,” declared University of Maryland economist Peter Morici.
“They are not expenditure it on a car or home improvement, but to rebuild their savings.”
Most of the figures were foreshadowed by data released earlier in the month and came as weak surprise to analysts.
Wall Street appeared to shrug off the bad news Wednesday.
The Dow Jones industrial average rose 2.9 percent to 8,727, the foremost close above 8,500 in nearly pair weeks.
The Standard & Poor’s index increased 3.5 percent and the Nasdaq closed 4.6 percent higher.
In Washington, D.C., however, the expenditure data added to the conviction of urgency surrounding the Federal Reserve’s new $800 billion plan to spur consumer spending by helping to take down mortgage rates and ease credit for example far as concerns consumers and small businesses.
Under the plan, the Federal Reserve will confer money to firms that provide scholar loans, auto loans and credit cards, as well as loans backed by the Small Business Administration.
The market for that financing “essentially came to a halt in October,” Treasury Secretary Henry Paulson said Tuesday, most important to a lack of affordable credit that “weakens our economy.”
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