Americans kept spending before government shutdown

August Surge

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. reported U.S. sales declines last month, with fewer weekend selling days and tight supplies of some models after August’s surge. General Motors Co. and Ford Motor Co. said earlier this month that the government shutdown posed a threat to an already slow economic recovery.

The budget battle pushed consumer expectations to a seven- month low, today’s Conference Board figures showed. The gauge measuring Americans’ six-month outlook dropped to 71.5 in October from 84.7.

“What we’re seeing is more hesitancy among consumers given the fiscal policy uncertainty and the absence of confidence about future employment prospects,” said Michael Brown, an economist at Wells Fargo & Co. in Charlotte, North Carolina, who projected an overall confidence reading of 71.5. “It’s very clear that consumers are going into this holiday season more restrained than last year in terms of the pace of spending.”

Jobs, Incomes

The share of Americans who expected their incomes to decline rose to a six-month high of 15.4% from a previous reading of 13.9%. Fewer respondents said jobs would become more plentiful in the next six months.

Limited employment opportunities help explain why Fed policy makers will probably delay a tapering of monthly asset purchases until their meeting in March, according to the median of 40 responses in a Bloomberg survey this month. The Fed’s decision to pare bond-buying depends on how it judges the strength of the U.S. expansion.

Fewer Americans said in today’s confidence survey that they plan to buy homes and cars in the next six months.

Holiday Shopping

Some companies project demand will pick up in the November- December holiday shopping season after a lull this month. United Parcel Service Inc., the world’s largest-package delivery company, said it expects daily shipping volumes to rise 8% during the peak shipping period between the Thanksgiving holiday on Nov. 28 and Christmas, led by growth in online shopping, according to an Oct. 25 statement.

“Looking to the fourth quarter, although some major retailers have expressed caution about holiday spending, they still expect robust online sales,” Kurt Kuehn, chief financial officer at UPS, said on the Atlanta-based company’s earnings call.

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