US swallows more bad news as EU unveils stimulus package

---

WASHINGTON, Nov 27 (AFP): More grim economic news emerged from the United States yesterday as European leaders proposed a fresh stimulus package in renewed efforts to halt the global financial slowdown.
A report on the eve of the national Thanksgiving holiday showed US consumer spending dropped 1.0 per cent in October, the steepest fall since September 2001.
It foreshadowed a dismal start to the fourth quarter for the world's largest US economy, which is reliant on consumer spending for around two-thirds of economic activity.
A day after the US Federal Reserve said it would pump 800 billion dollars more into financial markets, the European Union in its turn unveiled a 200-billion-euro (259 billion dollar) stimulus package.
"Coordinated European action can and will make a difference," commission chief Jose Manuel Barroso stressed as he put forward the wide-ranging EU package. "Business as usual is not an option."
But the news from the United States took the cheer out of the official start to the holiday season, usually the busiest time of year for retailers.
Ian Shepherdson, economist at High Frequency Economics, called the consumer spending report "horrible" and said much of the drop was linked to weak auto sales.
But because of falling prices-an inflation index linked to the report showed a 0.6 per cent decline-Shepherdson said "the fall in real spending was 0.6 percent after rounding, not quite as massive as the nominal plunge."
Other US reports made equally depressing reading.
The Commerce Department said orders for big-ticket durable goods fell a whopping 6.2 per cent in October, a further bad sign for manufacturing.
The drop in durable goods-such as planes, automobiles and appliances-was sharper than the 2.5 per cent decline expected on Wall Street.
"The combination of sharp declines in consumer spending and capital goods shipments in October points to a very weak fourth-quarter GDP report and, at this point, we think a decline in the neighborhood of 4.0 in real GDP looks likely in the fourth quarter," said John Ryding at RDQ Economics.