Friday, April 13, 2007
Yes, The Consumer Is Worried
Rounding out this explanation of why the American consumer is worried comes the early April U of Michigan consumer confidence survey, which dropped again. The headline number was 85.3, down from 88.4.
Current conditions: 102.4, down from 103.5
Expectations: 74.3, down from 78.7
Inflation projection was 3.3, up from 3.0.
This survey tends to move with gas prices, so don't look for an uptick anytime soon! TWIP said gasoline stocks fell again.
Update: Whoops! I forgot IBD/TIPP, which was published earlier. It dropped from 50.8 to 45.5. I've generally found it more useful. It is not fear causing this downturn in consumer confidence, as the article implies. It is significantly higher prices for basic goods which is translating to less spending money. The American consumer knows no fear whatsoever, that is, until the bills have to be paid.
Just wanted to say that this is a GREAT BLOG!
You add interesting insight and analysis to what CR does. I hope you keep it up.
A while back, I took umbrage with Mama’s notion that (paraphrasing) the American people are ultimately responsible for the current economic situation. How could they, I argued, be responsible for example, for, FED policies, even if they could understand the economics of those polices, when the FED is beyond political control and the effects of those polices are not felt until long after their implementation (e.g. interest rates).
However, upon further reflection, and this current posting on “Consumers”, I agree, albeit for different reasons, that the American people bear full responsibility. Ultimately, the purpose of economic policy is to affect behavior. For example, the policy of low interest rates is intended to cause more consumption. However, policy cannot force people to consume. They of their own free will decided to take on enormous debt to buy ‘things.’
A fascinating sociological study would be how, in the span of one or two generations, the social psychology of the American people changed from ‘low debt/high savings’ to ‘max debt / no savings.’
Could it be credit cards? They became popular in my younger years. Could they have slowly changed pyschology? It used to be that people learned to save from income as a way to buy things they wanted as young adults. Now they never do.
Sociology is way beyond me, so I'm not getting anywhere with wondering about this to myself.
After almost 30 years on Wall Street (can that be right?) This is the most balanced, well thought out and comprehensive piece of research I've ever seen. Don't get me wrong, CR and Tanta are great, and the forum has a high hit rate, but it's far from balanced.
Mama, will you marry me?
I agree with what you say about the virtues of this blog. It's the best as far as I'm concerned.
Also, if Mama accepts your offer to marry can I come to the wedding?
I am afraid our union will have to remain statistically contemplative!! Thanks for the compliment.
Sorry Average Joe. You might try asking CF a few questions. He really is a veteran of Street Trading Wars, and still on active duty. Sort of a financial Marine.
Bro #1, you have a point about inflation causing a mind shift.
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