Friday, April 25, 2008

Consumers Looking to Cut Their Spending

From the AP:

ixty percent of the public say they are now less comfortable about making a a big-ticket financial commitment, such as buying a home or a car, than they were just six months ago, underscoring their more circumspect behavior, according to the RBC Cash poll conducted by Ipsos, an international polling firm, in early April. A year ago, 48 percent said they were less comfortable about making a major purchase.

"I'm feeling more cautious about buying a house. We were thinking about that, but we'll be waiting a little bit longer than we otherwise would have," says Rockwell, 53, a homemaker in Baltimore, Md. She described the current economic climate as being fraught with insecurity. "A larger number of people are really hurting and even people fairly well off are feeling insecure," she says.

BIGresearch, a firm that tracks consumer behavior, said 53.6 percent of people they polled focused more on what they needed, rather than what they wanted, during their shopping trips over the last six months.

This should come as no surprise to anyone, given the current economic environment. However, let's look at the chain of events that led to this situation.

job growth has been dropping for awhile,

unemployment has been ticking up (although it is still at low levels), which leads to

declining personal income, which leads to

Declining consumer confidence

Let's not forget that gas and diesel prices at the pump are really high

All of this leads to

Declining personal consumption expenditures

But also note that retail sales have not been rising strongly for about he last year and a half

And the real year-over-year change is in fact negative now.