US experiences big fall in consumer spending

| November 27, 2008 | 0 Comments
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Figures from the Commerce Department have revealed that consumer spending in the US fell by 1% last month, the biggest fall September 2001.

Consumer spending, which accounts for more than two-thirds of US economic activity, had risen 0.3% in September. However, the latest figures show that the economic downturn is deepening.

Furthermore, demand for durable goods, such as fridges and cars, also fell considerably in October by 6.25% - more than double most Wall Street estimates.

On the day of Thanksgiving in the US, there was more doom and gloom after the Commerce Department said that new home sales had fallen to their lowest level for 17 years.

Sales fell by 5.3% to a seasonally adjusted annual rate of 433,000 - the lowest level since January 1991.

The figures come just one day after Henry Paulson, the US Treasury secretary, injected $200 billion (£131 billion) into the consumer credit market, citing a standstill in consumer lending throughout last month.

According to William Sullivan at JVB Financial Group, the figures indicate a downward slide in economic activity that is deepening as 2008 comes to an end.

In related news, it was reported earlier this week that the US economy contracted at an annual rate of 0.5% from July to September - much sharper than previously forecasted.

Tags: , , , Henry Paulson, new home sales,


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