Because consumers until recently continued to spend, there isn't the pent-up demand to spur the economy that has existed after previous slowdowns. So companies haven't been encouraged to boost production. Factory orders fell 1.5 percent in February, the most in five months.
Now the consumer may be pulling back. Personal spending stalled during the first two months of the year, the first time spending has failed to rise for two straight months since December 1990 and January 1991, when the US was in recession.
Even executives at companies such as Hooker Furniture, who are optimistic that sales will rebound later this year, say they would be slow to react to rising consumer spending. The company had US$60.2 million worth of inventory as of Feb. 28, twice as much as a year earlier.
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