Student Blog: Law, Markets, & The Role Of The State

ECONOMIC RECOVERY SEEMS BLEAK AS CONSUMER CONFIDENCE FALLS

By Allison Stouch on September 29, 2009 - Comments(0)

Economists predicted consumer confidence to rise in September, yet recently released figures show that consumer confidence unexpectedly fell this past month. American’s remain worried about the job market, causing them to stay focused on limiting spending, buying only necessities and hunting for discounts. This unpredicted drop in consumer confidence has left retailers concerned about the upcoming holiday season. Economists expect holiday sales to be flat from last holiday season, which was the worst holiday season in over four decades. Retailers are lowering inventory levels and slashing holiday hiring in anticipation of another season of bleak holiday sales. This means both good and bad for consumers this holiday shopping season: big sales to entice us to spend money, but no luck for job seekers hoping to find temporary work during the holidays. A more immediate concern to retailers is that consumers are predicted to spend even less on Halloween this year than last year. Many Americans will be sporting creative costumes this year as they look to celebrate on a budget.

However the recent drop in consumer confidence extends concern beyond the upcoming holiday shopping season to the progress in our overall economic recovery. The three-month climb of the Consumer Confidence Index indicated promise of a stabilizing economy, when it dipped in September. Because consumer confidence is so strongly linked to the job market and wages, economists predict consumer confidence will be stagnant. In turn spending will be down; thus, economic recovery will continue to be slow. How slow is slow? When can we expect a turnaround? Analysts say a true turnaround in the economy cannot occur until consumers start spending and employers create jobs. With the recent increase in unemployment and consumers’ lack of funds to spend, a true turnaround does not seem likely in the near future.

http://www.latimes.com/business/la-fi-consumer-confidence30-2009sep30,0,1086649.story

Tags: confidence consumer
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