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Katrina, high nergy prices hit pocketbooks
(AP)
Updated: 2005-09-30 22:03
The worry is whether the surge in energy prices, partly reflecting the
shutdown in production along the Gulf Coast, will so rattle consumers that the
economy could be pushed into a full-blown recession. The Conference Board
reported a sharp drop in consumer confidence in September.
Analysts, however, believe that the spike in energy prices seen in August and
early September will not be enough to shut down consumers' appetite to spend on
other items, although they are forecasting that economic growth in the current
July-September quarter will be lowered by as much as a full percentage point.
The 1 percent drop in spending after adjusting for inflation compared to a
0.5 percent decline in spending before inflation was taken out. The difference
largely reflected the fact that consumers were buying more expensive gasoline to
fill up their cars during the month.
Income after adjusting for taxes fell by 0.1 percent in August after an
increase of 0.4 percent in July.
Americans' personal savings rate remained in negative territory in August at
minus 0.7 percent. That compared to a minus 1.1 percent personal savings rate in
July, which had been the all-time low.
When the savings rate is in negative territory, it means that Americans are
not only spending all of their after-tax income but they are dipping into
savings accumulated in earlier months to finance spending.
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