Jobless Recovery
Drop in Consumer Spending Could Spell Trouble for Economic Recovery
U.S. consumers curtailed spending in September for the first time in five months the government reported on Friday. Combined with a weak report on consumer sentiment, it increased fears the economic recovery could falter as government stimulus spending winds down, sending the stock market into a downward spiral.
The news sent the Dow Jones Industrial Average plummeting by 294.85 points, or 2.51%, on Friday to close at 9,712.73. Meanwhile, the Standard & Poor's 500 Index fell by 29.93 points, or 2.81%, to close at 1,036.18 and the Nasdaq Composite Index plunged 52.44 points, or 2.5% to close at 2,045.11.
The Commerce Department said purchases fell by 0.5%, after gaining 1.4% in August, matching the median estimate of economists surveyed by Bloomberg News. But consumers continued to increase their savings even as their incomes dropped.
The Reuters/University of Michigan's consumer sentiment index rose to 70.6 in late October, up from 69.4 earlier in the month. However, that's still down from September's reading of 73.5.
The Three Factors Choking the U.S. Recovery
The stock market may have rallied, but the economy is threatening to erase those gains. This report shows you the three factors choking the recovery – and gives you 3 ways to protect your money until the real recovery sets in.
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