There has been a slow, steady shift in consumer sentiment towards debt since the beginning of the year. For quite some time, many were debating whether it was even happening. At Thanksgiving, the first real hints of what was coming could be found in poor turnout for pre-Christmas sales. Still, most assumed consumers would come through at Christmas like "they always do". Except this time they didn't. Christmas Retail Sales Disappointed in spite of bigger than ever discounts. After Christmas sales disappointed as well.
Consumers Are Retrenching
It's now clear to everyone that Consumers Are Retrenching As The Economy Weakens.
Joi Freemont, a dentist in suburban Atlanta, doesn't have to look further than her appointment book to tell that people are worried about money.
Patients who used to get their teeth whitened all the time "now want to think about it a bit," she said. Braces? "People were getting them for the kids, for themselves, but now they're waiting," she added. And when people get cavities, they have their fillings done one a month, not five or six at a time, she said.
As a result, Freemont and her husband are worried their income could drop and are trying to be more prudent with their money. They're monitoring spending more closely and continuing to whittle down their credit card balances and her dental school debt, she said.
Professor Depew was talking about the above article in point number 3 of of Tuesday's Five Things.
And so the consumer balance sheet repair meme continues to grow. As those who have read Five Things over the past couple of years know, this is not a behavior that began in August or September as the credit crunch began to manifest, it's something that has been building for years.
Consider talk show host and television personality Dave Ramsey. Chances are pretty good that by now you know who Dave Ramsey is, but just in case, he's the host of a popular, widely-syndicated show, "The Dave Ramsey Show," that is heard on the more than 300 radio stations and seen on Fox Business Television.
Ramsey has been talking about the evils of debt and the virtues of debt-free living for more than a decade. In fact, his career began in 1992 when he began selling books on financial health following his own personal bankruptcy crisis in the late 1980s. But only recently has Ramsey really been able penetrate the mass public's consciousness. Why? It's not because Ramsey suddenly improved his message, it's because social mood finally reached a point where his message is not just acceptable but sought out.
The psychological factors that have made Ramsey a household name are the same factors now working against the ability of the Federal Reserve and the government to stimulate credit demand.
I found 26 different versions of the same story, in various newspapers or magazines. Here is a sampling of the headlines.
U.S. consumers pull back on spending, worry more about debt as economy weakens
Consumers are cutting back
US consumers worry about debt, pull back on spending
Consumers pull back as economy weakens
Americans buckle up for slowing economy
Empty Malls as Economic Fears Spread
Americans tightening their belts
Consumers now spending less, worrying more
More consumers start to show financial restraint
Changing Attitudes Are Now News
Even Starbucks is affected.
The AP is reporting Starbucks tests $1 coffee, free refills. "Faced with growing competition from cheaper rivals, Starbucks Corp. is selling small cups of drip coffee for $1 with free refills as part of a test in its hometown."
Coffee is a minor thing, but unwillingness to spend $5 for a cup of coffee had to start sometime.
http://globaleconomicanalysis.blogspot.com/2008/01/changing-social-attitudes-about-debt.html
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
