Alan Davey shopped for watches at a San Francisco Fossil store last month. Consumer sentiment fell for the second month in a row, according to a new report Friday.
(Eric Risberg/AP)Photos (1 of 1)
US consumer sentiment falls. Sign of trouble?
By Laurent Belsie | 08.14.09
What’s wrong, Mrs. Consumer?
The stock market is way up since the spring. Job losses are slowing. Even factory production is finally turning positive.
So why are you so DOWN?
The latest indication comes from the Reuters/University of Michigan consumer sentiment index, which fell in August for the second month in a row. At 63.2, it now stands at its lowest level since the übergloom of March. Economists had expected the index to rise.
The survey follows a disappointing report on retail sales on Thursday, which dropped when it was expected to rise.
Consumers, it seems, see more wreck than recovery so far, especially when they assess their own financial situation. The Reuters/University of Michigan index of current personal finances plunged 11 points to 59, its lowest level since November 2008.
“There’s a bit of a reality check here that suggests that it’s not going to be easy to snap out of this recession,” says Brian Bethune, an economist at IHS Global Insight in Lexington, Mass. “We’re still … suffering from the cumulative effects of this recession.”
While consumer sentiment is not a good forecaster of future activity, the August readings should serve as a wake-up call to Washington not to get distracted from the economy by other policy initiatives, he adds. Maybe some stimulus packages, such as “cash for clunkers,” will have to be extended to buoy growth.
“There is a risk of falling back that cannot be dismissed,” Mr. Bethune says. “Trying to do [healthcare reform] during this particularly fragile part of the cycle is bad, bad timing.”
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Comments
2. Mr Pepper | 08.15.09
The fragility of consumer sentiment can turn and shift on the foilbles of a stomache ache, or a sour mood, or any such emotional indicator lacking any rationale. Whereas healthcare is an essential part of any modern progressive economy and healthcare in the USA is sucking the nation dry. That capital should be freed up and better used in better investment such as infrastructure, education, R & D, industry, new technologies and perhaps even a mission to Mars. President Obama is right, right right to get the healthcare shackes off the American economy, and provide it with some much needed dynamism. Healthcare is NOT a political issue, it is first and foremost an economic one, and resources much be reallocated to more productive areas. Stand firm on this one, and don’t back down. It is worth the risk and more.
3. dyoung | 08.16.09
There are still young people out of work. Are they supposed to now spend, spend,spend just because economists say so? They are barely scraping by, if that, and have had a bad scare.
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1. Greg | 08.15.09
I hear it said often that our economy is consumer driven. I also hear it said that economic polarization is at historically high levels. The way taxes and markets have been restructured by the swing to the right that was initiated in the Reagan years has inexorably diverted money from the lower and middle to the top. Those who are in control, the ones with the power and or money (one and the same these days) are killing the goose that lays the golden eggs. A prosperous and wealth generating economy nurtures a middle class, and discourages extreme wealth and poverty. A middle class encourages consensus in a democracy. Extreme class differentiation encourages political divisiveness. Unfortunately again, the opposite has been taking place for many years now. The USA is currently way off track, and as long as the ultra wealthy people/corporations/organizations are allowed their greedy grabbing, and there is no cultural sense of civic duty and some sense of collective purpose as a nations and a poeple, then our decline continues.