Consumer Spending, Incomes in U.S. Probably Increased in July
Consumer Spending, Incomes in U.S. Probably Increased
Jonathan Alcorn/Bloomberg
Ford has no plans to increase production of any of its current models because demand is fragile.
Ford has no plans to increase production of any of its current models because demand is fragile. Photographer: Jonathan Alcorn/Bloomberg
Aug. 27 (Bloomberg) -- Carmen Reinhart, economics professor at the University of Maryland in College Park, talks with Bloomberg's Michael McKee about the outlook for U.S. growth, the labor market and Federal Reserve policy. Reinhart and her husband Vincent Reinhart presented a paper at the Fed's annual symposium in Jackson Hole, Wyoming, today that finds the U.S., Germany and other advanced economies may face a decade of slow growth and high unemployment if the aftermath of the 2007 financial crisis tracks other post-crisis recoveries of the past century. (Source: Bloomberg)
Consumer spending in the U.S. probably rose in July as auto sales rebounded from the lowest level in four months, economists said before a report today.
Purchases climbed 0.3 percent after no change the prior month, according to the median forecast of 67 economists surveyed by Bloomberg News. Incomes also increased 0.3 percent, the survey showed, due in part to a government extension of jobless benefits.
The increase in spending probably also reflected the biggest gain in prices in a year, indicating the advance will be almost wiped away when the figures are adjusted for inflation. Companies from Intel Corp. to J. Crew Group Inc. are cutting forecasts as a lack of jobs and flagging confidence prompt Americans to scale back.
“The consumer is really not out there buying much more than they need,” said Ellen Zentner, senior macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. The economy is “in a pretty precarious position.”
The Commerce Department report is due at 8:30 a.m. in Washington. Spending projections ranged from no change to a 0.5 percent gain.
Federal Reserve Chairman Ben S. Bernanke last week said the central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if growth decelerates.
Bernanke’s Outlook
While the recovery has been slow to strengthen, “preconditions” for growth 2011 are “in place,” he said Aug. 27 at the Kansas City Fed’s annual monetary policy symposium in Jackson Hole, Wyoming. “Consumer spending may continue to grow relatively slowly in the near term,” he said.
Autos sold at an 11.6 million annual pace last month, up from an 11.2 million rate in June, according to industry figures. The gain extended a see-saw pattern over the past four months that shows demand is stagnating.
Dearborn, Michigan-based Ford Motor Co. has no plans to increase production of any of its current models because demand is fragile in the weak economic recovery, George Pipas, the automaker’s sales analyst, said in an interview this month.
J. Crew, the New York-based retailer of sportswear, casual and career clothing, last week lowered its full-year earnings forecast. Chief Executive Officer Mickey Drexler is already focused on next year after watching shoppers slow their spending in the last month.
Getting ‘Colder’
“It was hot and then it got colder,” Drexler said in a, Aug. 26 call with analysts. “People aren’t out there the way they were. We’re looking at spring 2011 and moving forward.”
Intel, the world’s biggest chipmaker, on Aug. 27 cut its third-quarter revenue forecast, citing weaker-than-expected consumer demand for personal computers.
The Standard & Poor’s Supercomposite Retailing Index has fallen 18 percent since reaching a two-year high on April 26.
Today’s report also will probably show prices climbed last month. The inflation gauge tied to spending patterns increased 1.5 percent from July 2009, after advancing 1.4 percent in the 12 months to June, according to the survey median.
Consumer prices, on which this data are based, increased 0.3 percent in July, the biggest gain since August 2009.
The Fed’s preferred price measure, which excludes food and fuel, rose 0.1 percent in July after being little changed the prior month, the survey showed.
Less Growth
The U.S. economy grew at a 1.6 percent annual rate in the second quarter, less than previously estimated, according to revised figures from the Commerce Department released Aug. 27. Corporate profits climbed at the slowest rate in a year and employee wages were revised lower, the report also showed.
Companies created 51,000 jobs on average from May through July, down from 200,000 in the prior two months, according to Labor Department data.
The government’s report Sept. 3 will show private payroll rose by 47,000 this month, according to the median forecast of economists surveyed. The jobless rate may climbed to 9.6 percent from 9.5 percent in July, the report may also show.
An increase in the workweek and an extension of jobless benefits probably helped boost incomes last month. President Barack Obama on July 22 signed into law a measure restoring unemployment benefits that were cut off. The bill provided retroactive aid to those whose checks were cut off when benefits expired June 2, while extending through November a program offering up to 99 weeks of assistance.
The economy is a top issue for voters in the November congressional elections and polls show the public is increasingly skeptical of Obama’s performance. Public approval for the president’s handling of the economy was at 41 percent in an Aug. 11-16 Associated Press-GfK survey, an all-time low and down from 50 percent last July.
Bloomberg Survey
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Pers Pers Core PCE Core PCE
Inc Spend Prices Prices
MOM% MOM% MOM% YOY%
==============================================================
Date of Release 08/30 08/30 08/30 08/30
Observation Period July July July July
--------------------------------------------------------------
Median 0.3% 0.3% 0.1% 1.4%
Average 0.3% 0.3% 0.1% 1.4%
High Forecast 0.6% 0.5% 0.3% 1.5%
Low Forecast 0.1% 0.0% 0.0% 1.3%
Number of Participants 62 67 46 22
Previous 0.0% 0.0% 0.0% 1.4%
--------------------------------------------------------------
4CAST Ltd. 0.3% 0.3% 0.0% ---
ABN Amro Bank --- 0.3% --- ---
Action Economics 0.4% 0.5% 0.1% ---
Aletti Gestielle SGR 0.3% 0.3% 0.1% 1.4%
Ameriprise Financial Inc 0.2% 0.2% 0.1% 1.3%
Banesto 0.2% 0.3% --- ---
Bank of Tokyo- Mitsubishi 0.4% 0.4% 0.1% 1.4%
Barclays Capital 0.2% 0.3% 0.1% 1.4%
Bayerische Landesbank 0.3% 0.2% --- 1.4%
BBVA 0.2% 0.1% 0.1% ---
BMO Capital Markets 0.3% 0.4% 0.1% 1.4%
BNP Paribas 0.3% 0.3% --- ---
Capital Economics 0.3% 0.2% 0.1% 1.4%
CIBC World Markets 0.2% 0.3% --- 1.4%
Citi 0.1% 0.3% --- ---
ClearView Economics 0.3% 0.4% 0.1% ---
Commerzbank AG 0.4% 0.2% 0.1% ---
Credit Agricole CIB 0.3% 0.4% 0.1% ---
Credit Suisse 0.4% 0.3% 0.1% 1.4%
Danske Bank 0.4% 0.3% 0.1% ---
DekaBank 0.3% 0.2% 0.1% 1.4%
Desjardins Group 0.4% 0.3% 0.1% 1.4%
Deutsche Bank Securities 0.3% 0.4% 0.2% ---
Deutsche Postbank AG --- 0.3% --- ---
DZ Bank 0.2% 0.2% 0.1% ---
Exane --- 0.4% --- ---
First Trust Advisors 0.2% 0.5% --- ---
FTN Financial 0.2% 0.1% 0.1% 1.4%
Helaba 0.4% 0.3% 0.1% 1.4%
HSBC Markets 0.4% 0.5% 0.1% ---
Hugh Johnson Advisors 0.3% 0.4% --- ---
IDEAglobal 0.2% 0.3% 0.2% 1.5%
Informa Global Markets 0.3% 0.3% --- ---
ING Financial Markets 0.4% 0.3% 0.1% 1.4%
Intesa-SanPaulo 0.3% 0.3% 0.1% 1.4%
J.P. Morgan Chase 0.4% 0.2% 0.1% 1.4%
Janney Montgomery Scott 0.4% 0.4% 0.1% 1.4%
Jefferies & Co. 0.2% 0.4% --- ---
Landesbank Berlin 0.2% 0.3% --- ---
Landesbank BW 0.4% 0.4% --- ---
Maria Fiorini Ramirez 0.3% 0.3% 0.1% ---
MFC Global Investment 0.2% 0.2% 0.1% 1.4%
Moody’s Economy.com 0.3% 0.3% 0.1% ---
Morgan Keegan & Co. 0.2% 0.3% --- ---
Morgan Stanley & Co. 0.4% 0.4% --- ---
Natixis 0.3% 0.2% 0.1% ---
Nomura Securities Intl. --- 0.5% 0.2% ---
Nord/LB 0.3% 0.0% 0.1% ---
Pierpont Securities LLC 0.3% 0.3% 0.1% ---
PNC Bank 0.3% 0.2% --- ---
Raiffeisen Zentralbank 0.1% 0.2% 0.1% ---
Raymond James 0.4% 0.3% 0.1% ---
RBC Capital Markets 0.4% 0.3% 0.2% 1.4%
Scotia Capital 0.3% 0.4% --- ---
Societe Generale 0.4% 0.4% 0.1% ---
Standard Chartered 0.2% 0.2% --- ---
State Street Global Markets 0.3% 0.2% 0.1% 1.4%
Stone & McCarthy Research 0.4% 0.3% --- ---
TD Securities 0.3% 0.2% 0.0% ---
Thomson Reuters/IFR 0.2% 0.2% 0.1% ---
Union Investment 0.2% 0.1% --- ---
University of Maryland 0.3% 0.3% 0.1% ---
Wells Fargo & Co. 0.2% 0.3% 0.3% 1.5%
WestLB AG 0.2% 0.3% 0.2% ---
Westpac Banking Co. 0.4% 0.2% 0.1% ---
Woodley Park Research 0.6% 0.4% 0.1% ---
Wrightson ICAP --- 0.3% 0.2% ---
==============================================================
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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