In these rough and tumble economic times, cheery financial news can be hard to come by, even amid the economic recovery itself. This remains true at the midway point of 2011—a full two years following the official end of the economic recession—as a major indicator of the strength of the America’s economic machine is showing that we’re still in the throes of an economic downturn, at least for consumers.
According to Reuters, Global consumer confidence fell in the second quarter “to its lowest level in a year and a half as an uncertain economic outlook, a deepening euro zone debt crisis and rising inflation made people more cautious, a survey showed on Sunday. Consumer sentiment in the United States was weaker than in the second half of 2009 at the height of the global recession, according to The Nielsen Company's quarterly survey of global consumers.
This not-so-good news means that consumers all over the world will be further pinching their currency and tightening their belts over the next months, including purchasing fewer luxuries like clothes and electronics, taking fewer vacations, and reconsidering major purchases like homes and cars, following more than a year of slight cautiousness on the buying front.
The reason is clear: “rapidly rising gas prices, inflationary pressures at check-out, continued woes in the housing market with home foreclosures and declining property values, unsettling weather patterns creating flooding and tornado damage, and a stagnant job market,” made consumer confidence hard to come by globally.
If you’re a retailer, this fading desire for folks to spend could mean another season of lost sales, lower profits, and a greater overstock of inventory with nowhere to go but on shelves. More directly, floundering business can also mean layoffs, contributing to a vicious cycle of higher unemployment, and, with layoffs, even less income to make purchases in the global marketplace.
So, this endless cycle of no confidence, no business, no jobs, (and no confidence to boot), doesn’t seem to be changing anytime soon. Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market itself takes a turn for the better.
And, since consumer spending is one of the most important parts of our nation’s economy—accounting for nearly 70 & of the country’s total GDP—a drop in consumer confidence is always a bad sign for America’s economic health. Plus, while experts don’t agree whether this slow growth will lead to a second Recession (otherwise known as “double-dip”), the longer the economy languishes the longer American families will likely do the same.
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