The U.S. economy has never before come to such a sudden, violent stop, crating into a probable deep recession with millions likely to lose their jobs by summer.
Retail sales fell 0.2% after declining 0.1% in May, the Commerce Department reports today. Spending has grown 2.8% over the past 12 months, a relatively modest pace given that the sales figures aren’t adjusted for inflation. TD Bank economist Michael Dolega calls the report “a disappointment as far as the resilience of the consumer is concerned.”
Cheap loans and a bounty of fuel-efficient models enticed people to buy new vehicles at a brisk pace last month. And the nation enjoyed another year-over-year surge in home prices in August — a sign that the housing industry is making a sustained comeback.
Hiring, housing, consumer spending and manufacturing all appear to be improving, yet remain less than healthy. Economists surveyed by The Associated Press expect growth to pick up this year, though not enough to lower unemployment much.
The Federal Reserve said the economy maintained its expansion in all 12 of its regions as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.
The three dozen private, corporate and academic economists expect the economy to grow 2.4% next year. In 2011, it likely grew less than 2%. The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006.
An Associated Press survey of leading economists finds they have grown more pessimistic in recent weeks. They say high unemployment and weak consumer spending will hold back the U.S. economy into 2012.
There “seems to be a lot of fear in the market, a lot of panic,” said Jackson Wong, VP of Tanrich Securities in Hong Kong, citing worries that the terms of a deal signed by President Obama on Tuesday to avoid a U.S. default may worsen an already slowing economy.