WASHINGTON: In a disappointment for the Obama Administration's efforts to push the US economy back to recovery, the US$3 billion "cash-for-clunkers" scheme may have stimulated retail sales far less than hoped.
Vehicle sales rose by only 2.4 per cent in July. American consumers, nervous about jobs and often unable to
finance new cars, left the scheme unexploited, though it has been popular and the initial US$1 billion ran out last month, after Congress approved an emergency top-up of US$2 billion.
Still more damaging for the prospects of the US economy was that sales at shops, malls and other retail channels fell unexpectedly last month - so much that the small effect of the US car-scrapping scheme was more than cancelled out.
An overall 0.1 per cent decline in sales, the first fall in three months, reinforced fears that the US recovery may be more unsteady than hoped.
The US Federal Reserve said earlier this week that the economy had flattened out, a view undermined by the latest news. Retail purchases excluding cars fell by 0.6 per cent on the month, again more than forecast.
Consumer spending, which accounts for 70 per cent of the economy, is projected to grow at an average 1.6 per cent through the first half of 2010, ending its worst slump since 1980, according to a Bloomberg poll of economists. Purchases rose at an average 3.5 per cent in the decade before this recession began in December 2007.
If joblessness is holding back consumer spending, then the US Labour Department had further bad news yesterday. Officials said that 558,000 people filed first-time claims for jobless benefits last week, up from 554,000 the week before. The American economy has shed almost 7 million jobs in the recession.
- INDEPENDENT
