New reports reveal some mixed results that speak to the state of the economy. On the one hand, manufacturing and construction show signs of improvement; on the other hand, sales and layoffs don’t look good. Translation: There is clearly hope that the economy is improving, but evidence speaks to the contrary.
Let’s start with manufacturing. In January, it grew at its fastest pace in over six months. This is mostly fueled by consumers’ evident interest in buying more cars and trucks, and the business industry’s evident interest in buying more machinery and equipment. Then there’s construction. In December, spending on construction increased in the residential, non-residential and government sectors.
However, any gains in manufacturing and construction are tempered by the sobering results reported for January sales and planned layoffs.
While about half of retailers reporting numbers for January logged increases in sales results, the other half fell short of expectations. Though holiday hangover is always a factor, this year has proven especially sluggish. The deep discounts that normally draw consumers in at the beginning of the year failed to produce little more than lackluster results. Then there’s planned layoffs, which rose in January, not surprisingly in the retail and financial sectors.
All of this seems to point to a disconnect between wishful thinking and reality.
Consumers are clearly skeptical about the economy, cautiously spending their money in the New Year. Planned layoffs, not to mention unemployment that continues to hover over 8 percent, doesn’t do much to boost consumer confidence in the other direction. And all the good intentions of hopeful builders and manufacturers cannot change the fact that U.S. consumers not only lack the means to spend more, but also the inclination.
