The US might be recovering from the physical havoc caused by Superstorm Sandy but the true extent of the economic damage inflicted is only now becoming apparent.
Today data releases demonstrated that the freak weather was largely responsible for a surprising drop in US consumer spending.
According to figures compiled by the Commerce Department, after increasing by 0.8 per cent in September consumer spending unexpectedly fell by 0.2 per cent in October.
Economists participating in a Bloomberg Survey forecast no change.
Although consumer sentiment has improved in recent weeks hundreds of retailers who had to batten down the hatches during the Superstorm were unable to benefit from customers more optimistic outlook.
Spending was also limited by stagnating wages. Today’s commerce report showed that Sandy triggered a wage drop which caused incomes to remain static. Wages and salaries fell by 0.2 per cent in October.
An economist with IHS Global Insight Inc commented; ‘Holiday sales will be a little weaker than we originally thought and part of the blame is that hurricane Sandy took out some of the momentum. When all is said and done, consumers are not performing robustly, but they have a few things in their favour. Gas prices have fallen and the housing market is showing some traction.’
As of 15:45 pm
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