Consumer spending weak

Uh oh. Our ailing economy has been single-handedly propped up by consumer spending, but that pillar may be about to drop as Bush continues his masterful War on the Economy.

US retail sales
dropped an unexpected 1.6 percent in February, the largest drop since November 2001 (in the wake of 9-11). Car sales were off a whopping 19 percent.

But guess what? Bush's oil industry pals are doing just fine:

One bright spot in the retail sales report was gasoline stations, where sales rose 2.7 percent. But economists had expected that category to perform well given the surge in gasoline prices.

Economists now believe the Fed will drop interest rates another 25 basis points.

Many economists have been expecting the U.S. central bank to stand pat on interest rates until war worries clouding the economic picture lift. However, policymakers are likely to keep a close eye on the pace of consumer spending which has propped up the economy in the absence of a rise in business spending.

A shocking drop of 308,000 nonfarm jobs in February fueled market speculation the Fed may cut rates at that meeting.

Posted March 13, 2003 08:15 AM | Comments (17)