Consumers cut spending, durable goods orders fall

Glenn Somerville
Reuters
Wednesday, November 26, 2008

WASHINGTON (Reuters) – Consumers cut spending during October at the steepest rate in more than seven years and orders for costly manufactured goods plummeted, according to Commerce Department reports on Wednesday that implied a steep recessionary downturn was at hand.

Spending that fuels two-thirds of U.S. economic activity dropped 1.0 percent, its biggest fall since the attacks against the United States seven years ago in September 2001.

It was a fourth straight monthly fall in spending and underlined how a credit crunch, falling home prices and steady job losses were sapping consumers’ will and ability to spend.

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Worse yet, a survey showed consumer confidence fell to a 28-year low in November as mounting job losses, falling incomes and tumbling household wealth battered sentiment, highlighting the troubles for the economy ahead.

Orders for costly durable goods like cars, machinery and computers dropped by 6.2 percent in October, more than twice as much as Wall Street economists had forecast, as demand weakened across nearly every major sector of manufacturing.

“The durables is not a pleasant number. It’s horrid across the board,” said Boris Schlossberg, director of currency research at GFT Forex in New York.

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