Wednesday, November 26, 2008

Consumers cut spending


Housing, consumer spending and business investment all weakened sharply last month as the dizzying downward spiral of the world's largest economy gathered speed, data showed on Wednesday.

Economic reports also showed unemployment rolls remained swollen at recessionary levels in the latest week, providing further support to economists who think the U.S. economy has entered its worst downturn in decades.

Consumer confidence fell to a 28-year low in November and tumbling durable goods orders for October illustrated the severe constraints on the economy as households and businesses alike cut spending plans on costly manufactured goods.

Orders for durable goods such as cars, machinery and computers dropped 6.2 percent in October, more than twice as much as Wall Street economists had forecast, as demand weakened across nearly every major sector of manufacturing.

The report's proxy for businesses' investment intentions, orders for non-defense capital goods excluding aircraft, fell 4 percent in October after decreasing 3.3 percent in September.

The slew of weak data pushed the prices of U.S. government bonds sharply higher and the dollar gained against the currencies of major trading partners. U.S. stocks also rallied on strength in the tech sector after Tuesday's sharp sell-off.

The deluge of data included a report from the Institute for Supply Management-Chicago showing business activity in the U.S. Midwest contracted in November at a more severe rate than expected.

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