Exports Rise, But Consumers Still Cautious

According to the Wall Street Journal, consumers do not show a postive outlook to the economic upturn although exports have strengthened.

 ”Since April, the sentiment index has fluctuated in a range of 65 to 71, which is characteristic of weak spending,” wrote IHS Global Insight U.S. economists Brian Bethune and Nigel Gault. “We don’t expect that consumer sentiment will break out of this range until job growth resumes next spring. Meanwhile, consumer spending is likely to show only sluggish growth and be a relatively weak contributor to the recovery.”

A recent survey from the University of Michigan asked consumers about their finances. One out of six reported they saw an improvement in their finances and only one in four expected growth in their income in the upcoming year.

But, on the brightside, exports have improved slightly by 16 percent. A vast improvement after if fell by nearly 60 percent at the beginning of this year.

“The outlook for U.S. exports is becoming increasingly positive,” wrote Michael Feroli, an economist for JP Morgan Chase Bank, who’s expecting the trade gap to narrow to $26.5 billion in July from $27 billion in June. “Foreign economic growth has returned” with U.S. trading partners growing at a 4% annual rate in the second quarter, on a trade-weighted basis.”

According to the article an improvement of exports is a key driver to helping the U.S. economy in its recovery.

With consumer debt decreasing with less spend, and exports improving. The U.S. may see a more postive outcome by the end of fourth quarter. Time will tell.

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