The Fiscal Cliff Worries May Hit Consumers
Who understands the economy better: businesses or consumers?
The question holds the key to the U.S. economy, as the nation confronts the prospect of $560 billion a year of tax increases and federal spending cuts that could cause another recession
In a nutshell, consumers have acted as if Congress and President Obama will work out a deal to delay some planned austerity measures and keep the economy growing. Businesses haven’t been so sure, and there are signs consumers are coming around to their point of view.
Business investment in equipment and software dropped 2.7%. This is the first drop since the recession’s end. Meanwhile, consumer spending climbed at an 8.7% clip, the best since early 2011.
But consumers may be starting to move closer to big business’ wariness. A group of 18 retailers, including Macy’s and Target, reported disappointing recent sales numbers.
Also, surveys in the past two weeks show an increase in consumers who are pessimistic about the economy over the next 12 months, compared with readings before the election and in September.