TOPWRAP 7-More US consumer worries as Germany boosts hopes
* U.S. consumers fall behind on loans at record pace
* New York shares hit lowest level in two months
* Surge in German orders feeds fragile hopes of recovery
* EU warns growth may be permanently damaged by crisis
* US should be open to 2nd fiscal stimulus - top Democrat (For more on the financial crisis, click on [nCRISIS]
WASHINGTON, July 7 (Reuters) - Talk of another U.S. stimulus plan and data showing American consumers falling behind on their bills underscored worries about the global economy on Tuesday, overshadowing an upturn in German manufacturing orders that provided a glimmer of hope.
Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit-card debt and home equity loans to all-time highs in the first quarter, the American Bankers Association said. [ID:nN07299679]
"The biggest driver is job losses," bankers' association chief economist James Chessen said. "Unfortunately, we're going to see higher job losses in the next year, and I expect elevated delinquencies."
Consumer spending accounts for more than two-thirds of U.S. economic activity and is one of the most powerful engines in the global economy.
Data showed orders in Germany, Europe's largest economy, rose at the strongest monthly pace in nearly two years in May, but economists said the yearly comparison would remain weak for some time yet. [ID:nL78809]
"This underscores expectations that we have the worst behind us. However, we shouldn't celebrate too much: If we stay on the current level, we would still have negative (annual) rates up until the end of the year," said HSBC Trinkaus economist Lothar Hessler.
The talk of a second stimulus plan added to concerns that the economy is not recovering as quickly as had been hoped, and investors sent U.S. stocks to their lowest levels in more than two months [.N] on worries about upcoming quarterly earnings.
European shares also slipped .FTEU3. Oil dipped below $63 a barrel. [ID:nSP379393]
WORDS OF CAUTION
OECD Secretary General Angel Gurria told Reuters that governments would risk killing the recovery if they withdrew stimulus spending too quickly. Continued...
