Consumers say they have little hope that the economy will improve, and businesses now appear to share the sentiment. The Financial Times reports that orders for non-defense capital goods excluding aircraft were down this past July for the fourth time in five months.
This is a key sign that businesses are preparing for tough times ahead. In particular, firms are wary of the looming “fiscal cliff,” when businesses can expect to be hit by a combination of tax increases and automatic spending cuts that may hurt consumers’ ability to buy:
“Both the underlying durable goods orders data and the manufacturing (Institute for Supply Management) orders series point to contracting order levels,” said John Ryding and Conrad DeQuadros of RDQ Economics. “This red flag suggests that manufacturing, which had been the mainstay of the recovery, could slow sharply over the coming months . . . and hinder the economy’s ability to pick up from its paltry sub-2 per cent growth rate recorded over the first two quarters of the year.”
The President has spent the better part of four years insisting that things are improving. Clearly, business doesn’t believe him. No one party is alone responsible for the mess, but voters go into the fall election believing that instead of helping the economy, Washington politics are hurting it.