WASHINGTON — U.S. shoppers are being careful about how much they spend, and that’s making businesses cautious about hiring.
For the economic recovery to gain strength — and the unemployment rate to come down in any meaningful way — consumers will need to become less frugal. But a flurry of data released Tuesday suggests families are reluctant to increase their spending, even as they buy more stuff, including cars and consumer staples.
“Once the unemployment rate starts coming down in a significant way, consumers will feel more confident and start spending. But businesses are reluctant to step up hiring until they see stronger demand,” said Chris Christopher, senior economist at IHS Global Insight.
Factory orders dropped in June for the second consecutive month after nine straight months of gains, and the number of buyers who signed contracts to purchase homes fell in June to the lowest level on records dating to 2001.
One telling detail about consumers’ habits these days came from Commerce’s personal income and spending report for June: the annualized savings rate stood at 6.4 percent, the highest level in nearly a year — and triple the rate in 2007, before the recession.
