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News Analysis for the Investor on September 27, 2013

 Consumer spending increases but consumer sentiment falls.  Healthcare rollout for small businesses delayed.

| BY Catherine McBreen

Consumer spending increases 0.3 percent in August

The Commerce Department said today that consumer spending on goods and services increased by 0.3 percent in August.  The Associated Press indicates that this is an increase of 0.2 percent from July.  Income rose 0.4 percent, the best gain since February and up from a 0.2 percent gain in July.  Consumer spending drives 70 percent of economic activity and many economists say the increases are not enough to accelerate economic growth from the 2.5 percent growth rate experienced in the second quarter.


Healthcare rollout delayed

The Obama administration indicated on Thursday that a technological glitch is forcing it to delay part of the rollout of the new health care law.  According to the Wall Street Journal, the insurance exchanges won’t be ready to accept applications from small businesses when the program launches on Tuesday.  Two million people are expected to be covered by the small business plans in the coming year.  The bigger concern is the readiness of the individual exchanges where seven million people are expected to gain coverage.  The small business exchanges will be open to businesses with fewer than 50 people.  Despite the delay by the administration, the small businesses are still required to be in compliance by January 1st.


Consumer sentiment falls

The Thomson Reuters/University of Michigan’s Index on consumer sentiment slid in September to its lowest in five months as consumers anticipate higher interest rates and sluggish economic growth ahead.  CNBC reports that the final reading on the Index slipped to 77.5 in September, down from 82.1 in August, and is the lowest rating since April.  Looming government shutdowns, combined with the need to face the debt ceiling, are causing consumers to be concerned about the strength of the recovery.


Detroit Pension funds fraught with fraud

An investigative report from the city’s internal watchdogs found that Detroit’s municipal pension funds exceeded their legal limits in real estate investments and paid retirees more than a 20 percent return on annuities that had lost their value.  The Wall Street Journal reports that pension officials have been ordered to turn over additional records regarding excess earnings paid to city retirees and employees.  The earnings may have cost Detroit more than $1 billion.  The pension funds are underfunded by $3.5 billion. 


Seven cars get top ratings in safety test

The Associated Press is reporting that seven midsize vehicles earned the top rating in a new insurance industry test of high-tech safety features designed to prevent front-end collisions.  The Cadillac ATS and SRX, Subaru Legacy and Outback, Mercedes C-class and Volvo S60 and XC60 won “superior” ratings in the Insurance Institute for Highway Safety Test.  While these vehicles are said to help drivers avoid frontal crashes, insurance companies are not necessarily lowering prices for consumers who buy these cars.

About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.