WORLD> America
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WORLD> America
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US goods orders, global spending falls sharply
(China Daily)
Updated: 2008-11-28 13:33 US business investment weakened last month and consumers are retrenching worldwide, reports showed on Thursday, heightening pressure on policy makers to take stronger steps to combat the credit squeeze.
Americans cut spending by 1 percent in October, the biggest drop since the last recession in 2001, while British households slashed expenditures last quarter by the most in 13 years, government agencies said yesterday. A US Commerce Department report showed orders for durable goods slumped twice as much as forecast as domestic and foreign demand dried up. President-elect Barack Obama held his third press conference in as many days to name former Federal Reserve Chairman Paul Volcker as an economic adviser. "It's about as bad as the 1970s and 1980s," said David Hensley, director of global economic coordination for JPMorgan Chase & Co in New York. "We're looking at back-to-back very deep slump in the global economy this quarter and next. The decline in personal spending in the US last month followed a 0.3 percent drop in September, the Commerce Department said yesterday in Washington. Adjusted for inflation, spending fell 0.5 percent, a fifth consecutive decrease. The last time price-adjusted spending dropped as many months in a row was in 1990-91. Holiday sales Retailers are concerned about the November-December holiday season, which brings in one-third or more of annual revenue. Zale Corp, the biggest US jewelry chain by stores, on Wednesday rescinded its annual forecast, saying in a statement that it "does not believe it can reliably gauge likely holiday performance or sales in the balance of fiscal 2009." Yields on 10-year Treasury notes fell to 2.98 percent at 5:15 pm in New York from 3.11 percent late on Wednesday. Yields on German 10-year bunds slid to 3.28 percent, the lowest close in almost three years. The US spending report showed incomes rose 0.3 percent after a 0.1 percent gain in September, and measures of inflation decelerated. The price gauge tied to purchases fell 0.6 percent in October and was up 3.2 percent from the same month in 2007. Stripping out fuel and energy, prices were unchanged on the month and up 2.1 percent from a year before. The inflation rate in Germany, Europe's largest economy, slowed more than forecast this month to 1.5 percent, the Federal Statistics Office said. That gives the European Central Bank greater leeway to keep cutting rates. UK spending In Britain, government figures showed consumer spending fell 0.2 percent and fixed investment dropped by 2.4 percent in the third quarter from the previous three months. Europe's second-largest economy suffered a 0.5 percent contraction in the period, the first decline in 16 years. UK Chancellor of the Exchequer Alistair Darling this week pledged 20 billion pounds of tax cuts and spending as the loan freeze and rising unemployment threatened to exacerbate the recession. In the US, the Reuters/University of Michigan final index of consumer sentiment dropped to 55.3 in November, the lowest level since 1980. Italian business confidence fell to the lowest in more than 15 years in November amid a recession in Europe's fourth-biggest economy. Postwar low "We're probably going to cut our forecasts for US, Europe and world growth next year by at least half a percentage point," said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. "This is one of the worst recessions in the post-war period." The Fed will probably cut its benchmark rate by half a point, to 0.5 percent, and may lower it to zero, Behravesh said. Macroeconomic Advisers LLC, JPMorgan and HSBC Holdings Inc analysts already predict a zero rate by January. US orders for durable goods, which are meant to last several years, slid 6.2 percent last month after a 0.2 percent drop in September, the Commerce Department reported. The median forecast of 72 economists in a Bloomberg News survey was for a 3 percent drop. Durable goods Excluding demand for transportation equipment, which tends to be volatile, orders dropped 4.4 percent, also more than anticipated and the biggest decline since January 2002. Those bookings were projected to fall 1.6 percent, according to the Bloomberg survey. Bookings for non-defense capital goods excluding aircraft, a measure of future business investment, decreased 4 percent, the biggest decline in almost two years. Shipments of those items, used in calculating gross domestic product, fell 2.4 percent following a 1.6 percent gain in September. Agencies |
