Nearly two years after the official end of the recession, Americans still remain unconvinced.
Consumer confidence has hit an eight-month low, according to a Conference Board report released Tuesday. The group studies how Americans feel about business conditions and the job market.
It turns out consumers aren’t feeling so hot about the prospects for the future, which economists say could be a self-fulfilling prophecy.
This can be seen in any parking lot of a big-box store.
“We’ve obviously cut back with not knowing what’s going on, and are trying to put more into savings, and not taking vacations and stuff like that,” says Helena Gramann, who was shopping at a Novi, Mich., Target andÂ Costco.
She and her husband, Greg, were going to the store with coupons, which is something they haven’t always done.
A Tight Budget
“It’s generally not like splurging as much,” she says. “As you see something, you think about it little bit more before purchasing it. Try to stick to the budget a little bit more.”
The Grammans say they’re doing just fine – both still have jobs – but they’re saving just to be safe.
Chris Christopher, an economist with IHS Global Insight, says that’s exactly the problem.
“In a downturn, the No. 1 problem is basically confidence,” he says. “Trying to get people to spend a little more, and it’s a very difficult thing to do.”
Christopher says one of the drags on consumer confidence are gas prices, which are up about a dollar a gallon from last summer.
“Consumers can’t go to their boss and say, ‘Hey, I want a higher salary this month because gasoline prices went up,’ ” he says. “They’re going to have to make ends meet, and they’re going to have to think of what to do. Dip into savings, use their credit card – if they still have a credit card.”
Meanwhile, Gary Bradshaw with Hodges Capital Management in Dallas says the cost of energy isn’t just affecting consumers.
“I think it reflects on the people out there hiring,” he says. “When they see their costs up pretty dramatically in a short period time, it causes the fella that actually needs to hire people to pause a little bit.”
And that adds to lack of confidence.
Consumers Sensitive To Bad News
Stacey and Patrick Grayson from Southfield, Mich. – one town over from Novi – said the high gas prices have made them stick a little closer to home.
“Our anniversary was yesterday and we wanted to go to Niagara Falls, but we’re here in Novi,” Stacey Grayson says.
“We just wanted to get out, get away from Southfield,” Patrick Grayson says. “So we spent some time at the Sheraton.”
Ken Goldstein, who works for the Conference Board, said the Graysons’ story shows where most Americans are right now.
He says consumers are responding to months of bad news about the economy. But what if there were some good news?
“Consumers are likely to treat that much better than another piece of bad news,” he says. “If that sort of balance begins to change a little bit, that’s when you’ll start to see consumer confidence really change – hopefully for the better.”
Goldstein says things are likely to say where they are now, at least for a while.