As I was driving to the office this morning, I heard the news, economists are using the R word.
So should you pack it in, curl up and hide, ride it out, or take advantage of what's going on?
Click here for the beginning of the answer.
In my email is this news:
Every pundit is throwing around that word recession, and it appears that consumers unfortunately agree ... only one in four (26.2%) are confident/very confident in chances for a strong economy in February, a five year low. What difference a year – and a sinking housing market, credit collapse, and record prices at the pump - makes ... back in February 2007, twice as many consumers (53.2%) held high hopes for the future of our economy.
With the ink still drying on Congress' stimulus package, will the rebate checks lead to an influx of spending on goods and services? About a third (30.3%) contends they'll save the money in their piggy banks, a quarter (25.4%) will use it to pay down credit cards, while 15.7% say they'll pay down debt (installment loans). When it comes to spending, it'll likely be the grocers and discounters who will benefit as 14.6% reveal that they'd purchase necessities with their checks ... that number climbs among those earning under $50,000 (22.5%). And while those aged 18-24 are the most likely group to save their checks (39.7% say so), this age bracket is also the most likely to use their checks toward paying off student loans (14.9%), buying apparel (13.3%), and purchasing electronics (11.2%).
No matter your political party, with Bush exiting the White House change is on the way on Capitol Hill, but will the shake-up provide new hopes for consumers or increased anxiety? This month, more than one in five (20.6%) say they worry more about political and national security issues, up more than two points from January (17.9%) and the highest reading since October 2006.
While confidence in the economy is plummeting, retailers should be relieved to know that practicality remains relatively stable ... two in five (40.2%) contend that they've become more practical in their purchases, down a point from January (41.2%), though still on the rise from '07 (38.7%).
Further proof that consumers may be coaxed into spending (and why retail sales showed a slight improvement in January) ... those focused on needs over wants in spending declines two points from January (49.9%) to 48.0% this month, stable with February 2007's reading (47.8%).
Consumers envision a rocky road ahead for the employment outlook ... the majority (50.4%) contend there will be "more" layoffs in the next six months, up from 41.5% in January and the highest reading since March '03 (50.4%). More than two in five (43.1%) predict layoff levels will remain the same (v. 50.4% last month), while 6.6% optimistically assert "fewer" (v. 8.0%). While consumers foresee a dreary outlook for employment, it seems they have the "it's not going to be me" syndrome for who's to get the pink slips ... 5.5% fear becoming laid off, up slightly from January's 5.2%.
With close to the majority (46.4%) feeling that there is "too much month" at the end of their paychecks all or most of the time, it should come as no surprise that fewer consumers are planning to become financially more conservative ... this month, 37.3% contend they plan to pay down debt over the next three months, flat from January (37.1%), though down from one year ago (40.4%) ... those planning to increase savings (28.7%) up slightly from January (28.3%) and down as well from '07 (31.1%). Plans to decrease overall spending (29.3%) and pay with cash more often (20.2%) decline from 33.7% and 23.0% last month, respectively, and remain flat with '07. Stay tuned to see how the government stimulus package (with checks to begin arriving in May) affect consumers' financial plans.
With the Dow flirting with the 12K mark in the past month (and consumer sentiment taking a nosedive), investors are feeling a bit bearish about the market ... this month, 53.1% of investors contend they would definitely/probably invest in the stock market, down more than eight points from January (61.2%). Investors planning to buy stocks declines slightly from January (11.5%) to 11.1%, while those planning to sell also declines from 5.8% last month to 4.9%.
With pump prices rising from $2.227/gal one year ago to today's average $2.972/gal (source: AAA), it should come as no surprise that driver's budgets are increasingly strained by additional fuel expenditures. While two in five (40.5%) are attempting to cope by simply driving less, more than a third say pump pressures have led them to reduce dining out (35.3%) and decrease vacation/travel (33.6%). Additionally, 29.8% are spending less on clothing while 22.4% are delaying a major purchase, such as a car or furniture.
However, it appears that drivers are easing up on their pricing predictions come St. Patrick's Day ... while half (49.9%) contend that pump prices will rise through March 17 (compared to the 69.8% who predicted "more" at Valentine's Day), 44.2% assert they'll remain the same, while 5.8% call for a decline. Consumers are predicting an average pump price of $3.11/gal at St. Patty's, $0.16 lower than the $3.27 forecasted for Valentine's Day.
(Source: BIGresearch, 2/08)
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