"The consumer continues to tag along slowly but surely. We have to see better job growth, better income growth."
- Eugenio Aleman, a senior economist at Wells Fargo Securities LLC
A couple of days before the key FOMC meeting the economy is sending weak signals, as retail sales rose less than expected, consumer sentiment plunged, while producer prices advanced only due to higher costs for food and fuels. The U.S. Commerce Department said retail sales inched higher 0.2% in August, posting the smallest gain in four months, and following a revised 0.4% rise a month earlier. The biggest part of the economy is struggling to improve affected by higher payroll taxes, small job gains and restrained income growth, meaning household spending that account almost 70% of the economy will not give additional boost in the coming months.
In a separate report the University of Michigan/Thomson unveiled the gauge of consumer morale sank to 76.8 this month, below analysts' expectations of an 82.0 and significantly lower than 82.1 recorded in August. Regarding the producer prices, they advanced 0.3% in August after a flat reading in July, while core measure, which excludes food and fuel costs, remained unchanged.
While the closely watched labour market is strengthening, other sectors are not showing the same stability. Moreover, Americans are likely to face higher interest rates soon as the Federal Reserve is expected to begin the trimming of its stimulus programme.
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