August 28th, 2009
03:02 PM ET

Financial Dispatch: ‘Clunkers’ boosts spending

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/08/24/art.cashforclunkers.0824.gi.jpg]

Andrew Torgan
CNN Financial News Producer

Consumer spending edged up in July with help from the popular “Cash for Clunkers” program. But household incomes - the fuel for future spending increases - were flat.

The Commerce Dept. says spending rose 0.2% last month, matching economists' expectations. Personal incomes were unchanged, a weaker showing than the expected.

Spending remains a big question mark as the economy tries to emerge from recession. Many economists worry that the American consumer - hurt by rising unemployment, weak income growth and depleted investments - will not provide the support the economy needs to rebound to sustained growth.

We also got a reading on consumer sentiment today, which fell to its lowest level in four months in August on worries over high unemployment and dismal personal finances.

The Reuters/University of Michigan Survey of Consumers said its final index of confidence for August fell to 65.7 from 66.0 in July - although the number did improve from a preliminary reading earlier this month.

Farms facing tough times

The American farm, which has weathered the global recession better than most industries, is starting to succumb to the worst recession in decades.

The U.S. Department of Agriculture released a forecast Thursday that farm profits will fall nearly 40% this year, indicating that the slump is taking hold in the Heartland. Translated into real dollars, that’s a $30 billion drop in net income.

Much of the agriculture sector had escaped the familiar aspects of the recession, such as the plunging property values plaguing cities and suburbs from coast to coast.

Farmers are also coming off years of record-breaking profits due to demand for corn to make ethanol and exports to China.

Whirlpool cutting 1,100 jobs

Whirlpool says it will cut 1,100 jobs and close a refrigerator factory in Evansville, IN. The jobs will be eliminated in mid-2010.

The Michigan-based appliance maker is still deciding what to do with 300 employees who work at a product-development center at the Evansville location.

Whirlpool plans to move the main Evansville production work to Mexico and another yet-to-be-decided location. The company has aggressively cut costs as demand for big-ticket items has shrunk in the recession.

Techs turning a corner?

Dell reported earnings that beat analysts' estimates late Thursday and said it expects stronger sales in the second half of the year.

The world's second-largest PC maker said it expects PC demand to improve on back-to-school spending and purchases by the U.S. government, while demand from large commercial customers will be slower to rebound.

And chip giant Intel boosted its sales outlook for the current quarter today, signaling an end to the deep recession in the PC market.

The tech bellwether said it expected demand for microprocessors and chipsets would be stronger than it had previously expected in the current quarter. That's largely due to the PC market, which Intel last month said has started to bounce back sharply.

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Filed under: Andrew Torgan • Economy • Finance • Raw Politics
soundoff (15 Responses)
  1. RLWellman

    How long do you think you will have to wait to see a doctor if all 300 million Americans have free health care? Plus the 12 million illegal aliens in the U.S.
    Ask the car dealers how long they have been waiting to get paid. This was just for 690,000 cars.
    Do any of you actually think that the Government can run this new program, when their track record is so dismal? They need to do their job and stay out of health care. They can help by lowering the cost of existing health care, have tort reform, let insurance companies cross state lines.

    August 31, 2009 at 7:21 am |
  2. RLWellman

    Just think if you are waiting to get in to see a doctor or get an operation and have to wait until the Government approves it. There were only 690,000 cars sold.
    How long will it take to approve 300,000,000 Americans for health care?

    August 29, 2009 at 9:24 am |
  3. Art

    There it is. The number one reason this country is stumbleing, more jobs going out of country just for the bottom line, awful. Lisa in Cal is right. It's happening all over, read her comment. The company's and wall street are showing signs of life only because "they" got the "bail out", not us. If "they" want me to spend money than lower the "price". Everything cost way to much. My grocery bill is outrageous, just for milk and bread alone. I'am starting to worry about my heating bill this coming season, Wall street seems to be at it again. If energy prices are allowed to climb again than there is no end to this, it will get worse.

    August 29, 2009 at 7:22 am |
  4. Mike

    And i bet most of those people who did buy a car for cash for clunkers are getting taxed this year for buying from this program.Bet most will defraud also on there payments too meaning getting there cars repode ord .And wasnt cash for clunkers wasnt that to help american car companys pretty funny only 1american car made the top ten car sells in cash for clunkers and that was the Ford focus. the other nine automobiles came from japan korea ,and etc . americans have no loyal tee to america. know wonder everything i s made over seas

    August 29, 2009 at 6:42 am |
  5. lampe

    Now wouldn't it be WONDERFUL, if these Car Dealers, could actually get paid?

    August 28, 2009 at 7:33 pm |
  6. Annie Kate

    I'm disappointed that Whirlpool is sending their work to be done in Mexico or elsewhere – another big corporation who believes it can cut costs by sending the work elsewhere and lay off Americans yet still expect their profits to continue even though they have put more workers in a position where rent and food are the main concerns and not a new appliance. I've had Whirlpool appliances for a great many years; they lasted a long time, needed very little service, and were good products. Now I suppose I need to find another American brand made in American to purchase when I need a large appliance – if there are any American companies using American workers left.

    Money for clunkers would have been nice to take advantage of to get a better car gas mileage wise but our clunkers weren't clunky enough to qualify. Maybe next time if there is one.

    August 28, 2009 at 7:32 pm |
  7. Paul Ernest Show

    Where are they governors and city mayors when you need them? Each of these two groups ought to be actively involved in pulling this economy up. There is too much reliance on the fed govt. Each governor and mayor should have a plan to stimulate their various local economies, without raising taxes. They are they ones who know where these closing companies are. They should approach many of them and together conduct financial assessments aimed at determining what they would need to stay in business, retain their workforce, and save their local economies. The Fed can then zero in on these shaky companies and offer them more assistance. Britain is doing it.

    August 28, 2009 at 4:57 pm |
  8. Jan

    I read recently that people are being taxed on the $4,500 they got for their clunkers. Wonder if they had time to read the small print?

    August 28, 2009 at 4:53 pm |
  9. zoe

    I meant: Cash for Appliances. sry, typo.

    August 28, 2009 at 4:01 pm |
  10. zoe

    Cash of Appliances is coming to town. How novel. 🙂

    August 28, 2009 at 4:00 pm |
  11. rob namias

    Once proud nation? In my eyes and heart this nation is still strong & proud. The problem today is the lack of unity in America. Every one seems to focus on drama Due to our goverment fighting aYmongst themselves like a group of little kids. And trying to get over on one another for personal bennifits.The American people seem to be following the trend

    August 28, 2009 at 4:00 pm |
  12. earle,florida

    The interest rate hikes coming from the credit card companies has put a damper on millions of americans,regarding higher payments,with less disposable cash for spending. The ethanol program was poorly thought out, period! The moon-shiner's must be laughing all the way to the banks,with their newly found fortunes. Whirlpool to Mexico,and Mexico to China,what's the big deal? Finally,all the fuss about the Tech's amuses me. Why? Who ya gonna call,or tweet,or e-mail,la-de-da when you can't efford paying for the services without a job,...? Sorry for the gloom,but america,can do better!

    August 28, 2009 at 3:57 pm |
  13. Lisa in CA

    The feds ought be concerned with stagnant personal incomes. Here in CA, where the unemployment rate is 12%, some employers are dropping wages because they can as there are so many people who work for that just to have a job. Jobs that used to pay $20-25/hour are now being offered at $12-15 ... with experience required. Foreclosures and credit card defaults and bankruptcies will continue to rise as a result of people no longer having the requisite incomes to pay the bills. Salaries are down yet the fixed payments remain the same, and some costs even increase. The financial institutes got bailed out but the people did not.

    August 28, 2009 at 3:50 pm |
  14. Carol

    I have done some work for the Cash 4 Clunkers programs and it sickens me to see some of the vehicles that people are trading in to junk. I would love to own one of the junked vehicles moreso a brand new one. I don't see how anyone "poor" is really helped much by the program because a lot of us can't afford to add more bills to our budget in the form of a $350 a month car payment. The only ones taking advantage of this program are people with money...and most of them have decent cars already. If nothing, I guess the economy might get a little boost from the money they're spending.

    August 28, 2009 at 3:46 pm |
  15. JC- Los Angeles

    From mortgage fraud to cash for clunkers? how is saddling Americans with auto payment debt a panacea for our once proud nation?

    Remember little Timmy Geithner and his Private/Public Investment Trust?

    Little Timmy planned to get his Wall Street cronies paid a second time on the same mortgage fraud that ruined the global economy.

    I guess Little Timmy thought that laundering money in plain site wasn't so wise so he invented the clunker.

    You can't make this stuff up.

    August 28, 2009 at 3:16 pm |