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Hundreds of imported vehicles were parked in a storage lot after being unloaded from freight ships in Elizabeth, N.J. The US trade deficit widened more than expected in September. (Mark Lennihan/ Associated Press) |
Amid job losses, confidence drops
WASHINGTON - Confidence among US consumers unexpectedly dropped in November as the loss of jobs threatened to undermine the biggest part of the economy.
The Reuters/University of Michigan preliminary sentiment index decreased to a three-month low of 66 from 70.6 in October. A report from the Commerce Department showed the trade deficit widened in September by the most in a decade as rising demand for imported oil and automobiles swamped a fifth consecutive gain in exports.
Rising joblessness puts the economy at risk of slipping into a vicious circle of firings and declines in consumer spending that will limit the emerging recovery. The dollar’s 12 percent decline since March and growing demand from Asia and Europe will probably spur exports further, giving factories a lift and making up for some of the weakness among households.
“Consumers face a lot of headwinds, and rising unemployment is the No. 1 worry,’’ said David Sloan, a senior economist at 4Cast Inc. in New York, whose forecast for confidence was the lowest of economists surveyed. “The recovery, in its early stages, will be led by increases in manufacturing rather than by consumers. Markets in Asia are rebounding quite nicely.’’
The US trade gap widened 18 percent to the highest level since January, the Commerce Department said. Imports rose 5.8 percent, the most since March 1993, as the cost of a barrel of crude climbed to the highest level since October 2008 and volumes also rose. Exports increased 2.9 percent, propelled by sales of aircraft and industrial machines.
The dollar dropped after the reports, while stocks climbed as higher-than-expected earnings at Walt Disney Co. and Abercrombie & Fitch Co. overshadowed the drop in confidence. The yen climbed to 89.71 per dollar at 4:23 p.m. in New York, up 0.7 percent from late yesterday. The Standard & Poor’s 500 Index rose 0.6 percent to close at 1,093.48.
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