I have never been a huge fan of surveys about what people say; I've always thought people's actions were far more important. Who wants to sound like a grump? But when people are spending less, it means that much more.
Before we get any further, let's make an assumption: people buy houses and cars when they are feeling more confident about the future. This has been a standard line of economic reasoning for awhile. People need to feel confident about the future in order to take on a financial responsibility that will last at least 5 years.
If the preceding statement is true, consumer confidence may not be that high. According to Barron's pulse of the economy we have the following year-over-year figures for car and new home sales.
Total domestic auto sales totaled 567,880 one year ago and 520,946 in February 2007. That's a drop of 8.42%.
Total light truck sales were 692,929 in February 2006 and 694,297 in February 2007. That's an increase of .18%.
New home sales were 1,197,000 in January 2006 and 937,000 in January 2007. That's a decrease of 21.72%.
There are other possible reasons. For example, maybe all of the household debt is starting to slow the purchase of durable goods. Considering the sky-high levels of debt in the economy that may be a possibility.
But whatever the reason, we know people are backing away from big-ticket purchases. That may mean people aren't feeling all that confident right now.
