Stocks Drop on Weak Data
Stocks Drop on Weak Data
All three major stock indexes fell today, even after consumer spending rose 0.4% for the month of July, and personal incomes rose only 0.2%. This rise in consumer spending is attributed to the Back to School shopping season and an uptick in demand for automobiles.
The Dow Jones Industrial Average was down more than 90 points, the S&P 500 was down almost 12 points, and the NASDAQ was down roughly 40 points. Terrible data is expected to come next month after housing numbers sank 27%, the lowest number of existing home sales since 1995, and the number of new constructions was down to its lowest level since 1948. The unemployment rate is persistently at 9.5%, and new jobless claims are over 400,000 each week.
Many analysts think this is a poor sign for the economy. Without jobs, consumers do not spend. Without consumer spending, businesses do not hire. Consumer confidence leads to consumer spending, which is what drives 70% of the Stock Markets and 70% of the economy in general.
Third-Quarter data is expected to show a rise in unemployment rates, from 9.5% to 9.6%, and some analysts fear the numbers could possibly be worse. This was supposed to be the “Summer of Recovery”, but most Americans are thinking it was much more like a “Summer Bummer”. Jobs and hiring did not increase, spending ticked up, barely, due to the back to school shopping season, and the slightly higher demand for automobiles. Gas prices are down, as is the price of crude oil, which has fallen below $75 a barrel. There has been much less demand for gasoline than in previous years, and prices are expected to stay steady or even drop a little lower in September, which is traditionally a time when demand for gasoline is lowered significantly.
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