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Consumer Caution
Confidence Plunges and Major Buying Decisions are Put on Hold

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Oct. 31, 2001 -- They were already nervous about the teetering economy before Sept. 11, but consumers are even more hesitant since the attacks and the anthrax scare that followed.

Marcus Tinsley

Marcus Tinsley
Photos: J. Stoll

Marcus Tinsley, 24, a sales trainee at the Crutchfield Corp. in Charlottesville, Va., "had the paperwork already signed" to buy a new home. "But I'm going to hold off now since those events, and try to see if the economy picks up ... to see if that's what I want to do." Tinsley says he might reconsider his home purchase next spring or summer.

Tinsley was among a group of Crutchfield employees interviewed recently about the economy by NPR's Juan Williams.

Lori Beck, 29, a receptionist at the consumer electronics retailer, was in the market for a bigger house, "but we just think it's a wise move to hold off on big purchases." With the United States already nearly in recession prior to Sept. 11, Beck says her confidence in Wall Street and the economy was "definitely" shaken. It is "even more so now," she says.

Lori Beck

Lori Beck

Tinsley and Beck aren't the only ones pulling back from the housing market. Nationally, new home sales fell 1.4 percent in September, while sales of existing homes plunged 11.7 percent.

Many of those interviewed said they're cutting back on discretionary purchases as well -- and they're more reluctant to use their credit cards.

"This is a throwback to my parents," says Ray Whitson, 43, an order processing clerk at Crutchfield. "You pay cash, you get it. If you don't, you don't get it."

"I'm not at all confident about where this economy will go," Whitson says.

Indeed, the Conference Board says its consumer confidence index plunged 11.5 points in October to 85.5, its fourth straight drop and the lowest level in more than seven years.

"The economic outlook is becoming increasingly pessimistic, with consumer sentiment continuing to fall," says Lynn Franco, director of the Conference Board's Consumer Research Center. "Widespread layoffs and rising unemployment do not signal a rebound in confidence anytime soon. With the holiday season quickly approaching, there is little positive stimuli on the horizon."

Ray Whitson

Ray Whitson

But Beck and Whitson say they're confident about one thing: the stock market eventually will rebound. "Right now, stocks are a wonderful buy," Whitson says. "They will go up again. Our economy is not going to collapse."

Still, Beck says she is worried that "things could get much worse" before they get better, amid uncertainty about the mail, the potential for more terrorist attacks and U.S. involvement in an "all-out war."

"Our society is in a state of flux," Whitson says. "I think everybody's going to hunker down, and it's going to take a long time for us to figure out who we are again. ... I'm not confident this is all going to be good and fine in a year's time."

Other Resources

The Conference Board consumer confidence releases

U.S. Commerce Department new homes sales data

National Association of Realtors existing home sales data

Federal Reserve "beige book" economic survey results

Crutchfield Corp.