US consumers’ gloom deepened earlier this month as worry about scarce jobs and falling income overshadowed positive news that industrial output last month grew for the first time in nine months.
The latest data on Friday pointed to a sluggish recovery at best with little or no help to come from embattled consumers.
The Reuters/University of Michigan Surveys of Consumers said on Friday its preliminary reading of the index of confidence fell to 63.2 from 66.0 last month, well below market expectations for a reading of 68.5.
Consumer sentiment dropped for a second straight month as US households, battered by high unemployment and falling home values, gave less favorable views their personal finances.
The erosion in confidence, coming a day after a government report showed an unexpected drop in retail sales added to fears that consumers would not drive the anticipated recovery from the worst recession since the Great Depression, leaving the economy vulnerable to a double dip.
“Even though economic output is probably increasing again, consumers certainly appear to still be in a funk. This is not entirely surprising given how many jobs are still being lost,” said Abiel Reinhart, an economist at JP Morgan in New York.
Consumers fuel about 70 percent of US economic activity.
There were a few bright spots in the consumer survey report, including a rebound in the home buying conditions index, and households’ outlook for the labor market was less negative than in the prior month.
“The survey suggests that households sense the economy is beginning to stabilize but they have not yet seen improvement in their own personal situation, and they probably won’t until the labor market begins to firm,” said Michelle Girard, an economist at RBS in Greenwich, Connecticut.
Industrial output rose 0.5 percent, beating market expectations for 0.3 percent advance, after a 0.4 percent contraction in June. Aside from a hurricane-related rebound in October, it was the first monthly gain since December 2007, the Fed said.
Industrial production was boosted as Chrysler and GM reopened plants that had been temporarily closed while the companies were under bankruptcy protection to reorganize, Fed data showed.
It was also lifted by the government’s “cash-for-clunkers” program, which gives consumers a credit for trading in aging high fuel consuming vehicles for new fuel efficient models.
Analysts worry that, with consumers keeping a low profile, a hoped-for recovery in the second half may be unsustainable.
“Growth is spurred temporarily by government initiatives, such as the cash-for-clunkers program, which further lifts the prospect for auto production. As those programs will taper off, the upswing will turn from a V-shaped into a more volatile W-shaped recovery,” said Harm Bandholz, economist at UniCredit Markets and Investment Banking in New York.
In another report, the Labor Department said US consumer prices were flat last month and dropped over the past 12 months at the fastest rate since 1950.
Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation rose 0.1 percent last month after increasing 0.2 percent in June.
Compared with July last year, the core inflation rate rose 1.5 percent, the slowest advance since February 2004, after increasing 1.7 percent in June.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS