With the Japanese consumer on long-term siesta, the German consumer in serious retreat, and the Chinese consumer yet to arrive, all eyes are turning nervously in the direction of the American consumer. After eighteen months of heavy lifting are they getting tired. Certainly the confidence index readings seem to suggest this, so do the initial reports on December retail sales. Now we learn that even Las Vegas is begining to feel the pinch, and that less short term debt is being contracted. Things don't look too promising right now.
Consumer credit outstanding posted an unexpected decline in November, the Federal Reserve said on Wednesday, its first drop in more than four years. The central bank said consumer debt fell by $2.2 billion in November after rising a revised $1.6 billion in October. It was the first time since January 1998 that credit had declined and the biggest drop since October 1991.
The report could increase worries that the consumer spending, the main driver of the U.S. economy, may be faltering. Household expenditures make up about two-thirds of economic activity. Analysts believe the economy grew at between 1 percent and 2 percent in the final three months of 2002, well below its limits and spurring the Bush administration to put forward an economic growth package on Tuesday. "Many Americans live in constant and increasing personal debt, with credit card bills so heavy they often cannot pay much more than the monthly minimum," Bush said in unveiling his package of personal and business tax breaks at a speech in Chicago on Tuesday. (You bet George! E.H.)
Source: Yahoo News
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