Consumer Spending Up, Sentiment Down

According to recently released data from the Commerce Department and the Reuters/ University of Michigan Surveys, consumer spending rose slightly in July thanks to the government’s Cash for Clunkers program. However, the same data also showed a slight decrease in consumer sentiment, highlighting the pressure from falling wages and rising unemployment.
 
The Commerce Department reports that consumer spending rose 0.2 percent in July off of strong auto sales, a number that gelled with analyst expectations and gave support to the theory that consumers are willing to spend money if the right incentives are introduced. Analysts worry, though, that the increase in spending will not continue since Cash for Clunkers is over.
 
Consumer sentiment, according to the Reuters/University of Michigan Surveys, has risen slightly throughout the month of August but remains significantly lower than its 70.8 high in June, sitting at 65.7. The surveys revealed that all levels of income have suffered almost equally from financial turnarounds and that consumers still expect unemployment to rise.

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