Cost of food and gas slowing U.S. economic growth
Retailers are carefully watching their receipts this weekend amid signs that higher costs for raw materials and sluggish consumer spending may be hurting the recovery.
The uncertain outlook has helped push stocks down nearly 300 points in three weeks, but with gasoline still close to $4 per gallon and food prices high as well, some merchants are doing very well indeed.
CBS News correspondent Seth Doane reports that for the tenth month in a row, consumers are opening their wallets. For example, at the "Fairway" grocery store in Manhattan, Manager Rick Garcia says shoppers are back.
"This is actually the business to be in, because everybody has to eat," Garcia said.
While the grocery business is great for sellers right now with food prices up six to seven percent nationwide, shoppers like Jane Aschular say they have no choice but to spend more. Her bill was $40 dollars higher than usual.
"Prices have really jumped just in the last few weeks...we've been shopping here for ten years and I just know the prices of everything and they're noticeably different," Aschular said.
Roughly 70 percent of the U.S. economy is driven by consumer spending, but a closer look at the numbers reveals that, these days, people are spending more on what they have to buy - necessities like groceries and gasoline.
Gas prices are up more than a dollar from this time last year. People are saying they used to be able to fill up for half the price they do now, and that prices are making people reconsider what kind of gas they buy and where they go to buy it.
The economy is no longer on the critical list, but it's still in serious condition. Retail sales are up more than 7 percent from last year, but economist Peter Morici says gas and food prices are a drag on the economy.
"A lot of the consumer dollars are absorbed by higher gas and food prices, which means that they're not buying shirts, going to restaurants as much, things of that nature, which would drive more growth," Morici said.
After a deep recession, it's normal to see the economic grow at around 5 percent, but now, economists are seeing just around 3 percent growth.
