Signs of deepening recession are multiplying in the American economy.
The Atlanta Federal Reserve Bank is now tracking a −1.0% contraction in the economy in the second quarter (though not willing to forecast this, nor is any bank economist so far), after the contraction in the first quarter was finally revised lower to −1.6% by the Commerce Department. The reason for the Atlanta Fed’s declining estimate is the same as in its releases over the past six weeks: a continuing fall in household consumption expenditures, and a rapidly increasing drop in the pace of business capital investment.
A survey in the mid-Atlantic area, by the mid-sized regional Provident Bank of New Jersey, which found nearly all the respondents cutting back their household consumption, was reported June 30 by ZeroHedge. More than 10% of the 600 respondents eliminated all non-essential purchases, and another 72% have made some specific cuts in their living expenses. The bank’s report says: “While some consumers have cut back on some non-essential spending, like dining out and unnecessary travel, others reported much more drastic changes such as skipping meals, conserving water, and eliminating meat from their diets. People are feeling an immense amount of financial pressure right now. Unfortunately, this is not surprising after the Labor Department reported earlier this month that the United States Consumer Price Index (CPI) hit a 40-year high in May.”
