WASHINGTON – A hazy picture of the U.S. economy has emerged from the most recent snapshots of retail sales, housing, manufacturing, the job market and the confidence of consumers.
The figures reflect higher borrowing costs, slower hiring and rising uncertainty just before much of the government shut down Oct. 1 – all trends that the Federal Reserve is trying to assess at a policy meeting this week.
Taken together, they portray an economy that was stumbling even before the shutdown, which further slowed growth.
Still, many Americans have managed to keep up their purchases in recent weeks. Their spending has raised hopes that if Congress can reach a long-term budget agreement in coming months, economic growth will pick up.
“One of the things that’s really holding back the economy is this fog of uncertainty,” said Mark Vitner, an economist at Wells Fargo.
One major factor behind the uncertainty: Congress and the White House agreed Oct. 16 to reopen the government – but only until Jan. 15, when a new deal must be reached. That raises the threat of another shutdown.
Nor is it clear when the Fed will begin to pull back on its stimulus for the economy. And the sloppy rollout of the Obama administration’s health care program has added to the reluctance of many small businesses to hire, Vitner said.
“This is a very difficult time for the Fed,” Vitner says. “The data is not all that clear, and there are a lot of structural shifts in the economy.”
The most recent reports the Fed will consider have pointed to a weak economy:
• Consumer confidence fell to a six month low in October, according to the private Conference Board. The partial shutdown made Americans more pessimistic about future growth and hiring.
• Retail sales rose modestly in September outside of auto sales, the Commerce Department said. Auto sales dropped 2.2 percent, the most in almost a year. Sales rose in most other areas, including restaurants, electronic and appliance stores, and sporting goods stores, a sign Americans were willing to spend on items that weren’t essential.