Consumers sure don't feel like dancin'
It's no surprise falling home prices and rising gas and food costs have Americans on edge, but economists are shocked by just how shaky consumer confidence has become, reaching a 16-year low. Nancy Marshall Genzer reports.
Shoppers walking by stores (iStockphoto)
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TEXT OF STORY
Bob Moon: Hope you're holding up under the pressure on this Tuesday, the 24th of June, because it's not really hard to understand why consumers are more than a little rattled these days.
Just take a look at the gas pump for starters and then all those worrisome headlines today: Home prices keep sliding, prices everywhere else keep rising and the economy is still on the edge.
Consumer confidence has skidded to its lowest level in more than 16 years, but what's really unsettling is the Conference Board's monthly index of consumer sentiment was six points lower than economists expected.
What gives?
We asked Marketplace's Nancy Marshall Genzer to find out why we consumers are singing the blues.
Nancy Marshall Genzer: Even in downtown Washington, just blocks from the White House, consumers feel insecure. Take engineer Peggy Vaneepoel and paralegal Dean Yorgey:
Peggy Vaneepoel: The prices are going up on everything while the economy is doing poorly.
Dean Yorgey: Gasoline causes higher prices for everything else... the food and people losing their jobs over it -- it's really sad.
Yorgey and Vaneepoel are both cutting back on their spending, purging their budgets of non-essentials and unnecessary travel.
Everybody's worried about gas prices. They hear about investment banks' troubles. Home equity loans are just a pleasant memory. Unemployment is over 5 percent. But hey, it was worse in the 70s, and we had disco music on top of everything else...
William Hummer: We had an impeachment, a very deep recession, and yet I don't think the consumer sentiment readings were much worse then than they are now.
That's William Hummer, chief economist at Wayne Hummer Investments. He says we don't have 70s-style inflation or unemployment now, so why do we feel so bad? The usual suspect: the media.
[Clip from CNBC]: What's going to make or break the markets today? We'll be back.
Jonathan Basile is a Credit Suisse economist.
Jonathan Basile: And there are many more outlets for financial news and I think the general public is more aware of it and can feel worse about it, especially when the news gets worse.
Basile says it'll take a few years for consumers to start feeling better. But at least in the meantime, we don't have to listen to disco music.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
Comments
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From Las Vegas, NV, 06/26/2008
At least in the 70s you could raise a family on a gas attendants' salary. Disco Rules!
From Frederick, MD, 06/25/2008
What is Consumer Confidence and how in the world do you measure it?
From Chantilly, VA, 06/24/2008
Where is the car that gets 100 miles per gallon? Because I'll take two please!! ...But this fuel crisis is just ENRON biting us on the backside once again-- first Sarbanes-Oxley now sky-high oil speculation! Let's just repeal Enron's legal black-hole and see what happens next! ...I have to agree with my wife on this one, she says there is never a bad time for the Bee-Gees!
From Napa, CA, 06/24/2008
I would take issue with Nancy Marshall Genzer's remark about things being worse in the 70's. Yes, we had runaway inflation, but we also had rising wages along with it. And was disco music really that bad?
From Lawrenceville, GA, 06/24/2008
It's unfair to blame "the Media" for today's consumer uneasiness about the economy. The fact is that people are much more in tune to the economy and the stock market today due to the proliferation of investment vehicles that are available to the average person now (401K plans, IRA's, on-line stock trading accounts) than were available back in the 70's. For example, for the week ending on 6-23-78 (30 years ago), the DJIA closed at 823.02, down 1.8% on volume (for 6-23) of probably 2,000,000 shares. The average person couldn't afford to buy stock due to high brokerage fees and round lot requirements. Compare that to 6-24-08 when the Dow closed at 11,807.43 on volume of 225,272,869 shares.
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