Pessimism Is Pervasive Among Consumers
ROBERT SIEGEL, host:
Now for the economic analysis, here is NPR's Chris Arnold.
CHRIS ARNOLD: You don't have to be an economist to figure out that having some of the worst consumer confidence numbers in decades is not a good thing. But to give us a little more detail on what's going on and just how bad this is, we called Nariman Behravesh. He is chief economist with the forecasting firm Global Insight.
Mr. NARIMAN BEHRAVESH (Chief Economist, Global Insight): We're well into recession territory when it comes to consumer confidence. And consumers have been the mainstay of the U.S. economy, so this is very, very troubling. It does suggest that all of a sudden, you know, another leg of the stool just got knocked out from under us.
ARNOLD: Behravesh says though there are two parts to the Conference Board's consumer survey when it asks people where they think the economy is headed that's the one that's looks very bad. People's takes on their current financial situation is better.
Mr. BEHRAVESH: What is happening is the consumers are very worried about the headlines. Brokerage houses are going belly up, you know, about problems in the mortgage markets and house prices going down. They are very worried. But most households in terms of their own finances in the majority of them are okay. They're doing okay.
ARNOLD: That's why Behravesh says these numbers don't panic him. He says consumers may pull back a bit if they're scared but…
Mr. BEHRAVESH: In the end, consumers tend to spend and tend to do things mostly based on, through pocketbook kind of issues. You know, do they have a steady income? Do they think they're going to have a steady income and, therefore, can they afford to make this purchase?
ARNOLD: In other words, if they have money, Americans will probably spend it. That's why Behravesh says he's still predicting a short and mild recession, but he says the growing foreclosure crisis and its fallout in the credit market could still cost a much deeper recession so he and other economists want to see more action from Washington on that front.
Chris Arnold, NPR News.