If Americans do as they say, this may be a summer of conspicuous nonconsumption.
The consumer confidence figures released last week showed that pessimism about the economy is at historic highs, and that plans to take vacations or make major purchases are at some of the lowest levels ever recorded.
That dire outlook has yet to be fully reflected in the economic statistics, however. It may be that some consumers are not really as worried as they say, or perhaps the economic stimulus tax rebates sent out this spring made it easier for consumers to keep buying other things even while they coped with US$4-a-gallon gasoline.
PHOTO: AP
One question the Conference Board has been asking for decades is whether Americans think their own income will increase or decrease over the next six months.
Most expect no change, and that has been true throughout the survey’s history. But until now, there have always been more who expected improvement than who thought they would earn less.
But the Conference Board, in its preliminary report for June, stated that its survey showed 12.3 percent expected their income to rise, while 15.9 percent expected a decline. That is the highest level ever for pessimism, and the lowest for optimism.
The proportion of optimists always falls during recessions. But in recent years, it has not recovered as it did after the two recessions in the early 1980s. Then, the level of optimism bounced back quickly. It took years after the 1990-1 downturn for optimism to recover to the level just before that recession began.
After the 2001 recession, optimism never did get back to pre-recession levels.
The Conference Board bases its expectations index on the answers to that question and two others. Those questions ask whether business conditions are likely to improve, and whether there will be more jobs, over the next six months.
In the June survey, 33.9 percent forecast business conditions would worsen and 35.5 percent think there will be fewer jobs. Both figures are the highest since the early 1980s. Fewer than 10 percent expect improvements in either area.
As a result, the expectations index, which stood at 94.4 last July, is down to 41, a record low. In terms of how they see the present situation, consumers still give more positive responses than they did in mid-2003. But at no time since the survey began in 1967 have they been less confident about the future.
The Conference Board’s survey also asks about buying intentions, although the answers to those questions do not affect the consumer confidence index. Car-buying intentions are at their lowest level ever, while fewer people plan to buy homes than at any time since 1982, when soaring interest rates devastated the housing market.
Americans may not want to buy a new home, but most say they are happy to stay close to their old one.
In the June survey, 35.8 percent of respondents said they planned to take a vacation in the next six months, including 18.9 percent who planned to drive rather than fly or take a ship. Both figures are the lowest since the Conference Board began asking the question in 1978.
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