Economy Watch: Consumers Feeling a Little Glum
By Dees Stribling, Contributing Editor
The Reuters/University of Michigan consumer sentiment index—which has looked something like a seismograph needle jumping up and down in recent years—dipped downward again to end October at 73.2, down from the end of September reading of 77.5. It also declined from the mid-October (preliminary) reading of 75.2.
The drop was more than expected, but was also seemingly in response to the latest example of factious governance by Congress. Consumer sentiment has more or less been improving since the end of the recession, with one glaring exception: the time in the summer of 2011 when a U.S. default seemed like a possibility, however remote. This most recent drop wasn’t in the same league as the ’11 drop, perhaps because fewer people actually believed default was likely.
The expectations component of the index drove most of the drop. It declined from 63.9 at mid-month to 62.5 at the end of the month. At the end of September, the expectations reading had been a considerably higher 67.8. The Michigan’s Consumer Survey Center queries 500 U.S. households each month on their financial conditions and attitudes about the economy.
Durable goods orders rise because of aircraft
Durable goods orders surprised on the upside in September, according to the Census Bureau on Friday. Orders of such goods—defined as those designed and expected to last most than three years—were up 3.7 percent to an annualized rate of $233.4 billion. In August, the increase was only 0.2 percent.
Almost all of the increase was on the strength of transportation equipment—largely aircraft. Take transportation out of the equation and the gain was only 0.2 percent in September. Defense spending accounted for a bit of the rise as well: take that kind of spending out, and the September new orders increase was 3.2 percent.
Orders for “core” capital goods—the likes of electrical equipment and industrial machinery—were down for September, dropping 1.1 percent. The August gain in core orders was initially reported to be 1.5 percent, but the bureau revised that down to 0.4 percent. Core durable goods orders are generally understood to be an indicator of business confidence, and if so, businesses are feeling a little glum, too.
Wall Street ended the week on an up note on Friday, with the Dow Jones Industrial Average gaining 61.07 points, or 0.39 percent. The S&P 500 advanced 0.44 percent and the Nasdaq was up 0.37 percent.