A worrying season for U.S. consumers
Americans have grown much more pessimistic about their own future and that of the economy, according to surveys being released just as the holiday shopping season gets going.
While it is unclear how much that pessimism will influence shopping, the pollsters are finding that fewer Americans say they are planning major purchases than at any time in recent years, and that the proportion expecting the economy to create more jobs is at its lowest level since 1974. The worries bode poorly for the global economy, which relies heavily on U.S. consumers for growth.
Such concerns could be cited as an argument for the U.S. Federal Reserve to lower interest rates when its Open Market Committee meets Dec. 11, despite worries about inflation. But another survey indicates that Americans are growing more worried about the inflation outlook as well.
Notwithstanding all the doom and gloom in the surveys, Americans generally do not seem to think things are that bad at the moment. It is in response to questions about what will happen in future months that the pessimism shows up.
The Conference Board survey of consumer confidence showed a rating of 115.4 for conditions in November. That is down from a recent high of 148.5 in March, but above where the index was two years ago. But the expectations index fell to 68.7, the lowest level since early 2003, when the economy seemed to be mired in a jobless recovery after the 2001 recession.
As shown in the accompanying charts, only 2 percent of respondents to that survey said they planned to buy a new car within the next six months, the lowest figure since April 1974. The proportion saying they planned to buy a home during that period fell to 2.5 percent, a 13-year low. A lower ticket item, but one whose purchase can also be delayed, is carpet. Just 3.3 percent of Americans said they planned to buy that within six months, the lowest figure since the survey began in 1967.
Most Americans are not pessimistic, with substantial majorities saying they expect economic conditions to remain about the same. But among those who see a change coming, there are now more expecting business conditions to get worse than better and more expecting employment to fall. More Americans still think their own income will rise than expect to see it fall, but the proportion expecting a decline, 11 percent, is the highest since mid-2003.
For the home-building industry, there was some encouragement from a recent survey. The University of Michigan consumer sentiment index found that 60 percent of Americans think this is a good time to buy a home. That is well below the figure of a couple of years ago, but 10 percentage points above the low reached in 1990, during the last major period of weakness in home prices. But within that optimism are big changes. Fewer people now point to rising prices or good interest rates as a reason to buy, while the proportion who think home prices are low has leaped.
