Consumer Spending Habits Point To Slow Recovery

Nov 02, 09 Consumer Spending Habits Point To Slow Recovery
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After strong stock market gains over the last few months, consumer spending habits have confounded Wall Street.  Despite being repeatedly told that the recession is over, consumers are still worried about the economy and credit is still very tight.

Many analysts believe that without the Clash For Clunkers Program, the economy would not have seen any increase in consumer spending.  On Friday, the stock market lost 2.5%, which is the steepest drop since July of this year.  In addition to tightened consumer spending habits, concerns about Citigroup and rising unemployment contributed to the huge losses.

Consumer spending had its largest drop in over nine months, while wages remained stagnant.  This does not bode well for those who are insisting that recovery is right around the corner.  This worries not only Wall Street, but also Pennsylvania Avenue.  The Obama administration is growing concerned about the 2010 elections.  If the economy has not started to recover by the summer of next year, the Democratic Party may experience a severe backlash at the polls.

Economic forecasters are hoping that the coming holiday season will provide a boost to the economy.  Unfortunately, no one has any good ideas about how to create sustained growth.  The new economic realities may be hard to accept, but we are forced to deal with them.  Any increase in consumer spending during the Christmas season may only be a blip on the radar.  A weak shopping season will be disastrous for businesses already holding on by a thread.  Consumer spending habits are normally hard to predict; however, consumers have no confidence that the economy will recover any time soon.  They have adjusted accordingly.

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