Consumer Comfort Tanks Like Never Before

The Consumer Comfort Index is registering its biggest drop ever. From Reuters:

NEW YORK, Aug 21 (Reuters) – A confluence of negative factors struck a blow to the confidence of American consumers in the latest week, with a weekly survey registering its biggest decline ever.

The ABC News/Washington Post Consumer Comfort Index tanked to -20 in the latest week from -11 in the previous period. It was the first time the index fell 9 points in a week since it was launched in 1985.

The measure ranges from -100 to +100 and its 2007 average is -7.

“The decline is broadly based among population groups, and there seems not to be a single negative event to blame, but a confluence,” the news outlets said in a statement.

They blamed “the stock market’s fall, troubled housing and credit markets, the (Federal Reserve’s) expressions of concern about an economic downturn, the cumulative effect of high gasoline prices during the summer driving months and a public broadly dispirited over the course of national events, driven by the unpopular war in Iraq.” [full text]

One thought on “Consumer Comfort Tanks Like Never Before

  1. Caution should always be excercised when trying to interpret which way the economic winds of change are blowing at any particular time. The recent difficulty in the housing market, the credit crunch and the continued high cost of energy all seemed to combine in a slump in the stock market. The Dow dropped fro its brief recor high at just over 14,000 to below 13,000 and the nay sayers and doom and gloom crowd filled almost every hour of the televison and print media. Instant experts had their Andy Warhol momemnt of fame. Lost in all this were the financial whizzes, no longer in demand during the “crisis” who pointed out the strengths of the economy, the low inflation rate, the high employment rate and continued job growth and that in a 14,000 DOW, even a loss of 1,000 points was miniscule (a bit more than 7%) and that overall for the year, the Dow had gained perhaps 6% (your bank may be paying you only 3% on your savings accounts).

    Sure enough, within a few days, new reports emerged. The housing market now shows an up turn in new construction, liqidity has been restored to the lending markets (if it ever really left), the inflation numbers look good, purchases overall are up with Labor Day sales ads hitting the streets, and the market has gained back hundreds of points. The job of Wall Street is to make money for Wall Street. The job of corporations is to make money for its stock holders. It is all very Darwinian: success leads to more success, failure hurts those who fail but improves what is left. If there is “good” in all this for society (whatever that means), the good is a by product not a goal and it seems to work. The American economy is the largest and wealthiest in the history of the world.

    Of course there are dangers and of course there are terrible pains in sectors of society. The high cost of ebergy is the result not of shortages–there is enough energy around–but because of the growth in many economies all competing for the same energy. It still costs perhas $2-$3 a barrel to pump oil in the Middle East or Russia. But the price is over $70 because of the demand. If Americans want to pay less for oil and gasoline, the only available way to do that is to drill in all those places politicians will not allow drilling or develp alternative fuels such as tar sands and oil shales and, of course, coal and nuclear energy. There is sufficient reserve sources to provide petroleum based fuels for several hundred years, if an aggressive program was undertaken.

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