Americans Less Likely to Spend
According to a recent Forbes report Americans are less likely to spend money due to the hurricanes, rise in gasoline prices, and job market worries. The Consumer Confidence Index fell to 85 for this past October. This is the lowest level the index has reported since October 2003, and down from 87.5 from this past September. This is the sharpest decline in 15 years. The unexpected decline in consumer confidence came as a surprise to analysts, who were expecting an increase to 88.
Do you think this consumer pessimism will continue to rise even after the huricanne season is over? What effect will this have on the up coming holiday season?
5 comments:
I personally think that it will pick back up for the holiday season. It might be low right now, but there is no real holiday around where people go and spend a bunch of money. I think though that once Christmas comes around there will be an increase in spending, getting closer to normal, but probably not quick there.
Think about this, though - according to an article in USA Today, the American Red Cross estimates that more than 350,000 homes were destroyed by hurricanes Katrina and Rita (forgive me for not having the Wilma data yet) and overall, 850,791 housing units suffered some damage.
With that many people affected by the hurricanes, I don't see how even the rampant materialism that overwhelms consumers during the holidays can make up for the fact that if these people don't even have permanent homes (most are living in hotels, trailers, volunteer housing and even tents) they're not going to be running out and buying the best flatscreen TV on the market. This I believe will lead to a less than stellar holiday season for retailers.
I feel that spending will pick back up over the winter. Look at what time it is currently. There really is no holiday to spend big on at the moment. When the holidays come around people will tend to spend more money. Gratned spending will not be as high as past years due to the hurricanes. But nevertheless spending will increase from what it is today.
I am confident that the consumer pessimism will now deminish more and more over then next few weeks, and pick right back up where it left off in light of the upcoming holiday season. Obviously, during a natural disaster, especially if you live in the area, you will probably only be purchasing the essentials you need to survive until things back to normal. Also, the high gas prices could cause customers to conserve money. Now that prices are coming back down, more "want" purchases will me made.
I also agree that the pessimism will begin to lighten up, but no as much as some think. Natural disasters really open up people's eyes and make them see that anything can happen. People are going to be less willing to spend money on something that is not a necessity, resulting in an effect on this christmas seasons purchases. In the future, though, as everything evens out, consumer confidence will more than likely go back up.
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