EconomicCrisis.US

US consumer spending fell for the first time in five months in September after a government program boosting auto sales ran out, official data showed Friday.

Personal consumption expenditures decreased 47.2 billion dollars or 0.5 percent last month, as expected by most economists, following a revised 1.4 jump in August, the Commerce Department said.

The fall in spending came as Americans’ income turned flat in September following a 0.1 percent increase the previous month, the department said.

The highly popular “cash-for-clunkers” program, which gave consumers a credit of up to 4,500 dollars toward the price of a new car or truck if they turn in an older vehicle with lower gas mileage, ended in August.
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Global imbalances — roughly defined, the different emphasis the world’s leading economies place on savings, spending and debt — is a phrase much used and little acted upon.

Well before the current financial crisis began, world leaders pledged to address this disconnect. At an International Monetary Fund meeting in 2007, for instance, representatives of the United States and the European Union agreed they should change economic incentives to encourage more savings and less spending; officials speaking for China, Japan and Germany, meanwhile, pledged to take steps to encourage spending. At the end of the day, nothing much happened, and these imbalances helped grease the skids for the global decent toward the economic abyss.
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In unprepared remarks given at a Wall Street conference hosted by The Economist magazine yesterday, Treasury Secretary Timothy Geithner delivered this eye-brow-raising comment: “We’ve got unsustainable deficits over a five- to 10-year window.”

The statement came at a time when the White House and Congress are under fire for their massive, unconventional deficit spending to rescue the economy. The US dollar is fluctuating dramatically against the euro and other currencies, and world leaders are increasingly demanding that world trade, notably in oil, be executed in another currency besides the US dollar, which economists forecast will weaken further.
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Just call it “the sound of no cards swiping.” Americans are keeping their credit cards in their wallets. Balances on U.S. consumer credit cards in August fell at a 5.8 percent annual rate, or by $11.98 billion, the U.S. Federal Reserve announced Wednesday. It was the seventh consecutive monthly decline in consumer credit — a pattern that’s consistent with both the frugal-consumer trend in the U.S. and banks’ decisions to lower, or in some cases eliminate, credit lines in the wake of the financial crisis.

Economists surveyed by Bloomberg News had expected August card use to contract by $8.5 billion. Revised figures for July showed consumer credit plunged a bit less, by $19 billion, than the originally reported $21.6 billion. In August, total outstanding consumer credit, including revolving and nonrevolving credit, declined at a 5.8% annual rate, or by $11.98 billion, to a seasonally adjusted $2.46 trillion, the Fed said.
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