Consumer Confidence Continues to Plunge
An article published by Yahoo! Finance discusses the plunge in consumer confidence to the lowest reading since Hurricane Katrina. According to the article:
The RBC Cash Index showed consumer confidence fell to a reading of 64 this month, down sharply from an early October reading of 80.6, when consumer sentiment was on the upswing as the stock market stabilized temporarily following a turbulent August.
Economists said conditions are being exacerbated by renewed problems in financial markets as investors have become worried by a string of huge losses reported by some of America’s largest corporations, including General Motors, Merill Lynch and Citcorp.
“We have a perfect storm of negative factors affecting the consumer right now,” said David Jones, chief economist at DMJ Advisors, a Denver consulting firm. “We have higher energy prices, declining home prices and a crisis-related tightening of credit.”
Consumer spending is closely watched because it accounts for two-thirds of total economic activity.
With decreasing consumer confidence comes a greater risk for a decline in the national economy. Many here in Utah are starting to shy away from taking out utah home equity loan mortgages as a result of this doubt. But the decline in the market and fears for the financial system only heighten the lack of confidence in consumers. We seem to be caught in a downward spiral and unless something stops us, a recession may very well be in our near future.
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