“Forecasters predicted a higher reading of 53.1. A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.” — Ashley M. Heher, AP Retail Writer
Instead of a white Christmas — a term coined to the holiday season and day of Christmas when snow covers the ground — may be more of a dream than a reality as the consumer confidence dips to an “unexpected” level this time of year. While the ground may be covered in snow this holiday season — if weather permits — there will certaily be a lot of coal in peoples’ stockings as the lack of credit and money affects peoples’ abilities to spend on extravagant gifts they were once able to purchase for their children and loved ones. In fact, the only color people will probably be seeing if they keep their credit lifeline running — if they have one left — is the color red.
Indeed, CITI bank has already started canceling hundreds of thousands of peoples’ credit cards, sometimes for little reason and for people with good credit histories. Other banks, like Bank of America, has stated that it wants to “experiment” with credit card users who have perfect credit histories and with those who pay their credit card bills off every month. Why? Quite simply because they make no money off of people who run no interest rate charges.
The following report directly contradicts what many think tanks, reporting agencies, and retail consortiums are telling the public through newspaper releases that retail spending is higher than ever. “The latest official data shows the economy is still in recession, however the retail sector seems to be finding its feet again after a challenging year, and the outlook for November is encouraging,” said Andy Clarke, chairman of the CBI Distributive Trades Panel and chief operating officer of Asda.
This makes no sense because the retail sector directly reflects the average person’s ability to spend money and is an indicator in consumer confidence as the following report shows:
US consumer confidence takes hit
US consumer confidence fell sharply and unexpectedly in October as fears about future job prospects increasingly preyed upon Americans. The closely-watched Consumer Confidence Index from the Conference Board business organisation slipped to 47.7 from a revised 53.4 in September.
Analysts were expecting the index to be unchanged or even to rise slightly. Separately, a leading US index has found that house prices rose by more than expected in August.
The disappointing consumer confidence figures hit US shares, with the Dow Jones index down by 24 points, or 0.2%, at 9843.93 soon after the figures were released.
Rising unemployment played a “major role” in knocking confidence, the Conference Board said.
Figures released earlier this month showed that the US jobless rate rose to a fresh 26-year high in September of 9.8%
The figures also cast doubt on how strong Christmas holiday spending will be this year.
“Consumers remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” said Lynn Franco, research director at the Conference Board.
Consumer spending accounts for about 70% of overall economic activity in the US, so weak spending in the run up to Christmas could have serious implications for the US economy.
An index reading of 90 in the Confidence Index is the minimum to indicate a healthy economy.