US consumption dips after clunker boost ends
Figures from the US Commerce Department have revealed a decline in consumption after the ‘cash for clunkers’ program, a government incentive designed to boost auto sales, ended in August. Data from September showed a 0.5 percent drop from the previous month, though August was up 1.4 percent on the month before.
While the slowing unemployment rate has been providing some relief, consumers have not shown great confidence in the economy.
“Consumer spending will probably continue to grow, but at a more subdued pace. After the 3.4 percent real spending growth in the third quarter, we expect consumption growth of one percent or less in the fourth quarter,” said Nigel Gault, chief US economist of IHS Global Insight.
Consumer activity accounts for approximately two-thirds of US economic activity, thus forms a vital part of their recovery. International Monetary Fund managing director Dominique Strauss-Kahn recently encouraged the US to retain government stimulus until employment became stable.
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