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Consumer Confidence Reaches 30 Year Low

So here is a summary, consumer confidence/sentiment has plummeted and is the toilet at a 30 year low.

According to survey data released by Thomson Reuters and the University of Michigan, the mood of the nation’s consumers in August was abysmal, raising concerns about any prospect of an economic turnaround.

“Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government’s role,” survey director Richard Curtin said in a statement.

More worrisome is that this data reflects consumer sentiment before the Standard & Poor’s downgrade of the U.S credit.

Shopping habits tend to correlate better with expectations. That’s probably because no matter what the present economy looks like, if a person feels hopeful about the future, he or she is more likely to be comfortable about spending more.

“People’s spending doesn’t always correspond with their mood,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut. “I doubt things are as weak as the sentiment readings suggest . . .”

The Thomson Reuters/ University of Michigan’s preliminary August reading on the overall index on consumer sentiment fell to 54.9, the lowest since May 1980, down from 63.7 in July. It was well below the median forecast of 63.0 among economists polled by Reuters.

For an economy that depends on consumer spending for about 70 per cent of its activity, a simple change in attitude can be the difference between a slowdown and a recession.

However, US retail sales in July posted the biggest gain since March, tempering fears of slipping back into recession. Consumer spending accounts for two-thirds of US economic activity, and the data indicates the third quarter was off to a decent start.

Excluding cars, sales rose 0.5 per cent, well above forecasts for a 0.2 per cent gain. The figures were bolstered by a 1.6 per cent jump in petrol station sales. Retail sales excluding cars, petrol and building materials rose 0.4 per cent.

Consumer Confidence Reaches 30 Year Low

The Michigan report said, “Consumers have shifted from being optimistic about the potential impact of monetary and fiscal policies to a sense of despair and pessimism about the role of the government.”

According to economists at J.P. Morgan, the government-policy index “has fallen a whopping 30.0 points over the last two months to an all-time of low 45.0.”

The JPM report also said the survey showed “the decline in August sentiment occurred very early in the month, and no further declines were reported since the downgrade of U.S. debt and turmoil in equity markets early this week.”

Consumer Confidence Reaches 30 Year Low
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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Pat

       This consumer confidence failure is the direct result of abysmal leadership from our nation’s leaders, the head of which is the President. Who, by the way has ponied-up hundreds of billions to banks–billions that we and our kids and grand-kids have to pay-back, somehow.
        If we are all in this boat together, then the captain of the ship needs to man-up, take responsibility, and take charge rather than forever standing in front of cameras with a bunch of supporters staged behind him, and pointing the finger at everyone but his own counter-business and counter-employment policies.
        While I wished I was wrong, I have been around too long and I’ve always seen President Obama as a green, very green and inexperienced leader. I have seen green leaders in the past, and helped train many to take a role of leadership; example, honesty, and tough decisions. He still doesn’t get it and I am afraid there are a lot of people suffering because of that. Unfortunately he sees leadership as ability to deflect responsibility and that is leading to this crumbling confidence, or to keep with the boat and captain analogy, the morale aboard is piss-poor and there is nothing we need more than honest leadership to restore morale (confidence) in our economy.

  • Loscar

    Behind in mtg payments for 13 months due to my wife’s medical problems and medical bills which prevented me from earning my usual salary. I’m presently in the balck re: my financial situation.  I presently receive SS retirement benefits and supplement my income doing independent sales rep an  insurance agent for the last 35 years. I contacted the HOPE assistance office for  help with the HAMP mtg mod and that turned out ot be a waste of time. I recently hired an attorney to assist me in getting my mortgage modified and made the mortgage company, BOA aware of this fact and provided them with a letter giving my attorney full power to negotiate on my behalf. Thru my attorney’s legal guidance we compiled the docs that the servicing bank, BOA required to process the applciation, including a hardship letter explaining my financiall situatioin. I have been my wife’s care taker my since she had a stroke which left her partially paralized and with aphazia, and I have to attend to her 24/7.  I recently received a letter from BOA which stated that I had been denied the HAMP mod because the required info had not been received withn the time span required by the HAMP rules. BOA had the application in their posession for over two weeks, their debt collection dept even called me to make me aware that they had received my application and were in the process of evaluating it. When I made my attorney aware of the denial letter, his assistant immediatly called BOA and was told that they had committed an error. My application had been received whithin the HAMP time rules and that they were going to re-evaluate my case and would let me know of their decision within 7-to 14 days. The point of this letter is to reinforce the info that I have received from various HAMP mod applicants who have have been given the run around in the same way BOA, the HOPE assistance program treated me. BOA is presently demolishing homes that are in forclosure because they are stuck with them, so  why don’t they try and process mod applications more rapidly for those that qualify.
    Please Note: I’m not one of those that applied for a 110% mortgage loan, I put down over 40% on my loan, no credit card loans and the only overdue bill is my mortgage, so where is the  common sense in resolving this Real Estate housing situation.    L. Oscar   

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