Conflicting Economic News Continues

Aug 29, 09 Conflicting Economic News Continues
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Factory output increased by 0.5% in July.  This marks the first time in nearly two years that output improved.  Economists are hoping that this news portends an economic recovery in the near future.

The manufacturing sector is greeting this news with cautious optimism.  They know that the increase is partially because they severely cut their output at the outset of the recession.  However, if production continues to rise, more people will be able to find work and the unemployment rate will begin to drop.

On the other hand, consumer spending slowed down again, after an initial uptick in June.  Although many economists and business owners believe that the Cash For Clunkers program contributed to the small bump, forecasters predict that consumer spending will continue to fall in the coming months.

Since consumer spending is the largest part of the economy, a real recovery will be hard to sustain without a substantive rebound in consumer spending.

And there’s the rub.  Two stories, each with conflicting economic news, jockeying for position on the same business page.  Production has increased and consumer spending decreased.

But the increased production is no cause for cheer and the bad news about consumer spending no cause for alarm.  Keeping up with such overwhelming information, and sifting through it in order to find the kernel of truth, is hard work, but staying informed will pay off in the end.

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