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Americans hit the mall with renewed consumer confidence

By Catholic Online (NEWS CONSORTIUM)
September 2nd, 2012
Catholic Online (www.catholic.org)

Americans are starting to shop again - partially die to new buying confidence, partially due to an uncertain situation come January. U.S. consumer confidence rose slightly in August to a three-month high. People are reportedly feeling more optimistic about their current situation, according to a new barometer released this week.

LOS ANGELES, CA (Catholic Online) - The Consumer Sentiment index from Thomson Reuters and the University of Michigan increased to 74.3 in August, a 2.8 percent increase from July. The reason for the season was due to a jump in how consumers view their present situation, which was up 7.3 percent from the previous month.

The uptick offset a slight drop of 0.8 percent in how consumers expect the economy to perform in the near future. Fears stubbornly remain about tax increases and government spending cuts that will begin in January if Congress does not act.

"Despite the August gain, confidence has been in a holding pattern during the past few months," Richard Curtin, chief economist said of the survey. "Aside from the past few years, the average level of consumer confidence in 2012 was lower than in any other year since 1982."

The findings released this week stood out against another leading gauge of consumer confidence. The Conference Board reported earlier this week that its consumer confidence index fell in August to its lowest level since November.

Both indexes, however reported consumer concern about the major tax and spending changes looming early next year, dubbed the fiscal cliff.

Curtin said the uncertainty about fiscal policy in 2013 "will increasingly cause consumers to become more cautious spenders."

Incentives by companies such as General Motors Co. are boosting sales, just as Federal Reserve efforts to lower borrowing costs are allowing Americans to reduce debt, which may underpin consumer spending. Nonetheless, Fed Chairman Ben S. Bernanke today said additional action to spur growth remains an option because unemployment is a "grave concern."

"Confidence is lackluster,"  Jim O'Sullivan, chief U.S. economist for High Frequency Economics Ltd. in Valhalla, New York says."It typifies the economy right now. It's not strong, but not collapsing either."

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