Saturday, 4 July 2009
If you think it's bad here . . .
The consumer comfort index in the US has declined to -53, which compares with what we call consumer confidence at -25 in the UK for June. Of course such measures are subjective, but such measures of collective subjectivity are often valid.
Data will soon be published for how the US economy performed in the second quarter of 2009, and it is expected to show another contraction. If confirmed this would be the first four quarter contraction in US post-war history.
And the signs don't look good. US manufacturing production declined in May to its lowest level since 1998.
It was confirmed on Thursday that US job losses were again high, with 467,000 people losing their jobs in June. This means 7.2 million US citizens have lost their jobs since December 2007. US Unemployment is now at 9.5%. As if to prove the old adage 'if the US sneezes, Europe catches a cold', Eurozone unemployment hit 9.5%, Eurostat announced this week.
On Friday it was reported that US salaries have dropped 2.3% in the year to May 2009. With rising job losses and pay contracting it is hardly surprising that mortgage foreclosures are rising - hitting a record high in the three months to May.
This in turn explains the low level of 'consumer comfort', despite Obama's much heralded $787bn fiscal stimulus. As the world's major power in the global capitalist economy, what happens in the US ultimately affects us all.