WASHINGTON — Two reports released Wednesday reflected the continued weakness in the economy amid the recession but offered a bit of optimism.þþIn one report, orders to factories for big-ticket manufactured goods fell again in November, reflecting further setbacks in the auto industry and a big drop in demand for commercial aircraft.þþThe Commerce Department reported that orders for durable goods fell 1 percent last month, a decline that was smaller than the 3 percent decrease economists had been expecting. However, the decrease was on top of an 8.4 percent plunge in orders in October, which had been the biggest decline in eight years.þþThe weakness in November reflected a big 37.7 percent fall in demand for commercial aircraft and a smaller 0.2 percent drop in orders for new vehicles and auto parts.þþIn another economic report, consumer spending fell for a fifth consecutive month in November, the longest weak stretch in a half-century, while incomes declined under the weight of massive job layoffs.þþThe Commerce Department reported Wednesday that consumer spending fell 0.6 percent last month, slightly less than the 0.7 percent drop that economists had expected.þþAmericans’ incomes fell by a worse-than-expected 0.2 percent. It was the first decline since July and reflected in part the fact that more than a half-million jobs were cut in November as the recession deepened.þþThe 0.6 percent drop in consumer spending followed an even larger 1 percent fall in October. However, the steep plunge in gasoline prices, which is actually good news for consumers, made the declines look worse. Excluding price changes, consumer spending would have dropped by 0.5 percent in October and actually risen by 0.6 percent in November. The November increase excluding inflation was the best showing in more than three years.þþStill, economists think the overall trend for consumer spending is down, given the problems facing the economy including the longest recession in a quarter century, a severe financial crisis that has cut off access to credit for millions of borrowers and a massive wave of job layoffs.þþAll of those troubles have left retailers braced for what could be their worst holiday shopping season in decades.þþEconomists do not think the hard times will end any time soon. The government reported Thursday that the overall economy, as measured by gross domestic product, was declining at an annual rate of 0.5 percent in the July-September quarter and analysts believe the contraction will accelerated in the current quarter. Some are forecasting that G.D.P. will plunge at an annual rate of 6 percent, which would be the worst showing in 26 years.þþMany analysts say G.D.P. will also fall in the first and second quarters next year before beginning a modest rebound in the summer. If that forecast turns out to be accurate, it would make the current recession, which began in December 2007, the longest in the post World War II period.þþThe economic weakness is helping to keep inflation under control. A price gauge tied to consumer spending fell by a record 1.1 percent in November, the second monthly decline. Excluding the cost of energy and food, the price index was unchanged last month.þþIn the last 12 months, consumer prices are up 1.4 percent, the smallest 12-month change since August 2002.þþEconomists closely watch consumer spending because it accounts for two-thirds of total economic growth. For the July-September quarter, the government reported Tuesday that spending had fallen by 3.8 percent, the biggest quarterly setback in 28 years.þþAnalysts say the fourth quarter could turn in an even worse performance, given that the recession has intensified. The economic problems facing households have translated into weak holiday shopping for retailers.þþ
Source: NY Times
