Monday, September 28, 2009

HOW US CONSUMERS CONSUMPTIONS GOING ?


It seems that the US consumers as well as the economy is really coming out of the dark woods. Looking at the US economy data till we find some major improvements followed with some interesting turning points.
The positive contributions came from supplier deliveries, the interest-rate spread, stock prices, building permits and consumer expectations. This revels that consumer good supply have picked up which relates to demand picking up among the US consumers .The building permits also depicts the demand of housing projects and requirements. Their also some negative outcomes from the economy which needs a critical watch out in the coming days.

The negative contribution comes from the real money supply, jobless claims and capital-goods orders. Capital goods depicts the picture of manufacturing process followed with demand in engineering and infra projects. The higher rate of Unemployment is also one of the major factors of the economic growth. Economist have already made deceleration that unemployment might touch to 10%.Higher unemployment results to higher amount of unemployed benefits, increasing the fiscal deficit to climb above 10% of GDP. The factory workweek and consumer-goods orders were unchanged in August
Construction of new single-family homes and apartments accelerated in August to the strongest pace in nine months, a further sign of steady improvement in home building since the beginning of the year. This a very good indication as all other sectors linked with this Housing sector will lead towards a small step of the US economy coming out of recession and some growth is expected by 2010 beginning .Total housing starts rose 1.5% to a seasonally adjusted annual rate of 598,000, the highest figure since November 2008.
The data made economists even more confident that third-quarter growth would be positive. Building permits increased 2.7% to 579,000, also the highest level since November. Another major thing which draws the attention is that the US consumers continued to pay down debts or have their debts written off at a record pace. In the second quarter, household debt fell at a 1.7% annual rate to $13.7 trillion, matching the record decline in the fourth quarter. This relates that the US financial position is also stabilizing .Another good news linked with this is that the US consumers are in saving prone and shifted form the much older philosophy of living life on Debt. Over here many of my readers will debate that if US consumers are in saving mode then where we will get US consumption picking up.
I would like to know that does one needs Consumption at the cost of higher debt resulting to the repetition of the Great Fall of 2008.If they are in saving mode that will not result to a Debt Bubble.


Household debt has fallen four quarters in a row and is down 5% from the peak.

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