Spending Down After Hurricanes

The aftermath of both Hurricane Katrina and Rita continue to hinder consumer spending and confidence. Consumer spending fell 0.5% in August - the largest monthly fall in nearly four years - reflecting the recent rise in gasoline and domestic fuel prices.

Gasoline climbed above $3 a gallon for the first time, in most parts of the country, after Hurricane Katrina. The government estimates the hurricane destroyed uninsured property worth $100 billion in four southern states. Economists expected rising fuel costs to eat into household expenditure, but the fall in spending was larger than expected.

And the government estimates the hurricane destroyed uninsured property worth $100 billion in four southern states. Meanwhile, consumer confidence, as surveyed by the University of Michigan, dropped by more than expected in September. The index of consumer sentiment dropped to 76.9 in September, from 89.1 in August, the biggest drop in two years.

                                 

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