Consumer Spending Takes a Hit
Morning Money Memo…
The economic damage from the government shutdown may be much greater than the widely reported $24 billion estimate from the financial firm Standard & Poor's. The holiday shopping season could take a beating. Consumer confidence has been falling in recent weeks.
The bickering in Washington hurt auto sales. New numbers from JD Power and Associates showed that sales dropped. During the first week of this month, sales were 300,000 more than during the second week. LMC Automotive Vice President Jeff Schuster says sales had been expected to return to robust levels seen over the summer. He says there's no explanation for the decline other than a drop in consumer confidence due to worries over the government shutdown and a possible U.S. default on its debt.
Business leaders who are normally allies of the Republican Party are voicing frustration with the GOP over the government shutdown. "In interviews with representatives of companies large and small, executives predicted a change in how business would approach politics," reports The Wall Street Journal.
EBay gave a gloomy forecast about the impact of the shutdown on its bottom line. The company says the U.S. economic environment has worsened and that's likely to affect the growth in e-commerce. Shares in EBay plunged nearly 5 percent after its quarterly report was released late yesterday. The company's third quarter profits rose 15 percent compared with last year.
Stanley Black and Decker shares fell 14 percent. The large toolmaker slashed its profit forecast in part because of the shutdown. Several economic forecasting firms have lowered their outlook for fourth quarter growth.
Stocks surged after it became clear the federal debt ceiling would be raised. The Dow Jones index gained 206 points yesterday. The S&P 500 was up nearly 1 and a half percent. Futures are down this morning - but not by as much as Wednesday's gains.
Federal officials have received more than 3,800 complaints in the last year from borrowers of private student loans, with common problems related to payment processing and requests for loan modifications. The complaints against lenders were documented in a report released by the federal student loan ombudsman, Rohit Chopra, of the Consumer Financial Protection Bureau. The complaints represent a tiny fraction of the millions of private student loans outstanding. About 13.7 million private student loans were outstanding at the end of 2011, the bureau and the Education Department estimated.
Five former employees of ex money manager Bernie Madoff are on trial in New York. The prosecutor portrayed the accused as greedy, lying thieves who assisted Madoff his massive Ponzi scheme. Opening statements by defense lawyers to begin today
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow