Economy Watch: Consumers Edgy About Near Future

By Dees Stribling, Contributing Editor

According to the mid-September reading for the Reuter’s/University of Michigan’s consumer sentiment index, Americans are about as gloomy as they were at the beginning of the month. The index came in at 57.8 on Friday, a hair above the previous reading of 55.7, based on a survey of 500 U.S. households about their own financial conditions and their outlook for the wider economy.

Some components of the index are as bad as they’ve been in years, however. The six-month outlook, which is the main component of the sentiment index, was down 0.4 points to 47. To find previous six-month expectations that crummy, one has to go back to the Iranian hostage crisis and the oil-shock problems of more than 30 years ago. As recently as this spring, the component was about 70, but Congressional dysfunction and bad employment numbers seem to have torpedoed consumer sentiment over the summer.

Oddly enough, consumer assessment of current conditions in mid-September posed a gain of almost six points, up to 74.5. So the prevailing sentiment seems to be, “I’m OK for now, but the economy’s going to you-know-where in a handbasket.”

About half of states see monthly uptick in unemployment

The U.S. Bureau of Labor Statistics reported on Friday that 26 states and the District of Columbia reported unemployment rate increases in August, while 12 states recorded rate decreases, and 12 states had no rate change. Compared with a year ago, 37 states now have lower unemployment rates, but 11 states and the District of Columbia have more unemployed than at this time last year. Two states haven’t seen a change in a year.

The states with the largest number of people thrown out of work in August were New York (down 22,700) and then Georgia, which lost 18,200 positions. Minnesota, on the other hand, saw the nation’s largest increase in employment in August, adding 28,400 jobs, followed by North Carolina, up 16,500 jobs. The biggest loser in percentage terms was the District of Columbia, with a month-over-month decline of 1.8 percent, and the biggest winner in percentage terms was Minnesota, up 1.1 percent.

Regardless of the fluctuation of the other states, Nevada retained its long-standing and long-unwanted title as having the highest highest unemployment rate among the states, 13.4 percent in August. California was next at 12.1 percent. North Dakota retained its enviable status as the state with no jobs recession, having an unemployment rate of only 3.5 percent (and why aren’t we hearing about the “North Dakota Miracle”?). Next lowest is Nebraska at 4.2 percent.

Europeans give Geithner cold shoulder

Though the meeting of U.S. Treasury Secretary Timothy Geithner with his euro-zone counterparts in the small city of Wroclaw, Poland, was behind closed doors, word is that the euro-ministers were rather cool to the advice that Geithner brought to the table about dealing with Greek, Irish, Italian other other euro-debt. Haughty European disdain for Americans, or a reasonable skepticism about debt advice from a country with considerable debt?

Hard to say, but it is useful to note that Greek public debt is 142.8 percent of Greek GDP in 2010, according to Eurostat, which provides the EU with statistics. Italy has public debt equal to 119.1 percent of GDP, Belgium 100.9 percent, Ireland 96.7 percent, Portugal 93 percent, France 82.4 percent, Germany 83.2 percent and Austria 71 percent. The comparable U.S. number for public debt is 62.3 percent of GDP in 2010.

Wall Street gyrated a good bit on Friday, but ended up. The Dow Jones Industrial Average gained 75.91 points, or 0.66 percent, while the S&P 500 and the Nasdaq advanced 0.57 percent and 0.58 percent, respectively.

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