What Recovery?

Expectations of a strong rebound in the US economy were called into question on Friday with disappointing reports on retail sales and consumer attitudes.

US retail sales rose in August, but more slowly than expected. Sales by retailers reached $319.2bn (€290bn, £200bn), a rise of 0.6 per cent from the previous month and 5.4 per cent from August 2002, according to the US Commerce Department. The top-line sales figure, however, was only about half of what economists had been expecting.

The second surprise came with a report suggesting that consumer sentiment had edged lower in early September from August levels. The consumer sentiment index compiled by the University of Michigan fell in its preliminary September reading to 88.2, down from the final reading for August of 89.3. Economists had expected September to be above 90.
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"The big risk facing the US economy is the lack of job creation," said John Lonski, chief economist at Moody's Investors Service in New York. "You cannot indefinitely sustain a brisk pace of consumer spending without job creation."