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The New Economy

US economy: Consumer sentiment improves a little

By / September 11, 2009



In an economy where progress seems to be agonizingly slow, the US consumer has just taken another small step.

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Consumer sentiment rose to 70.2, the highest index reading since June, the Reuters/University of Michigan Surveys of Consumers reported Friday. That exceeded economists' median expectation and, essentially, returns the index to where it stood a year ago, just before the panic of the Sept. 15 Lehman Brothers collapse.

The index – a measure of shoppers' confidence – still signals considerable wariness, however, which means that consumers probably aren't going to boost spending soon. That, in turn, suggests that any recovery will probably proceed at a molasses pace, because consumer spending plays such an important role in the US economy.

"Confidence remains well below both its peak and the long-term average of 86.7," writes Paul Dales, an economist with Capital Economics, in an analysis. "The continued weakness of confidence supports our view that after a short-term burst, growth will fall back in the second half of 2010 as consumption remains weak."
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