With consumers skittish, hopes muted for holiday sales
Consumer spending has stalled along with the economic recovery, new data show, muting expectations for the critical holiday shopping season.</br></br>The Commerce Department reported Friday that spending rose a modest 0.2 percent in August from the previous month when adjusted for inflation - well below last year's August gains. In addition, economists say the increase was boosted by the federal government's temporary extension of unemployment benefits, which also padded incomes and savings.</br></br>The feeble appetite of shoppers is one of several factors holding back the economic recovery. The stubborn unemployment rate and continued fallout in home prices have not only taken their own toll on the nation's financial health, but they also have consumers cautious, keeping their wallets in their pockets.</br></br>A monthly survey by the University of Michigan/Reuters that was released Friday showed consumer sentiment dipped in September, dropping seven-tenths of a point on the index to 68.2. That falloff was driven by declines in long-term expectations, even though consumers recognized that their current situations had improved since the depths of the recession.</br></br>"I think the consumer is a little better off. . . . But I don't think they feel better off," said Jeff Kleintop, chief market strategist for LPL Financial.