The stock market has rocketed and plunged this week, but it’s clear to many Americans that their finances are stuck at rock bottom.
Survey data released yesterday showed that consumer confidence plummeted in August to the lowest levels since May 1980, and there may be good reason for people to feel glum. Another recent survey by the National Foundation for Credit Counseling showed that nearly two-thirds of respondents don’t have enough money saved to cover an emergency expense of $1,000 or more.
“A lot of people, no matter how hard they try, are living on the edge financially, and they’re only one paycheck or on unexpected bill away from financial disaster,” said Gerri Detweiler, a personal finance expert for Credit.com. “A lot of people are still pretty worried about whether they’re ever going to get to a place where they feel secure financially.”
The broader dive in consumer confidence reported Friday may have been influenced by very recent events, including the political fight over the debt ceiling, the subsequent downgrade of the U.S. credit rating by Standard & Poor’s and the wildest week on Wall Street in years.
In fact, retail sales actually rose 0.5 percent in July, the strongest growth in four months, according to Department of Commerce data released yesterday. But Stephen Stanley, chief economist at Pierpoint Securities, pointed out that the cascade of negative events that sent stocks tumbling occurred in August, the same time the consumer confidence survey was done.
“You do have some of the garden variety fear and uncertainty that goes along with lackluster economic conditions and concerns about a double dip, and certainly the drop in stock prices over the last couple of weeks isn’t helping,” Stanley said. “The question is always whether they end up translating into actual behavioral changes — do people stop spending?”
For some people, the question isn’t a choice.
Seventeen percent of the National Foundation for Credit Counseling survey’s 2,667 respondents said they would borrow money from friends and family to pay a bill of $1,000 or more, while another 17 percent said they would stop paying other monthly expenses. Taking out a loan or getting a cash advance on a credit card drew another 9 percent each, while 12 percent said they would start selling possessions.
Respondents took the survey on the foundation’s website — DebtAdvice.org — and may disproportionately represent those who are struggling. Still, there are plenty of people who can relate to the results.
Lance Conzett, 24, of Nashville, Tenn., said he would be undone by a large, unexpected bill. Conzett struggles to pay for his monthly expenses, which include payments on more than $30,000 in student loans, despite working full time as a technology analyst and supplementing that job with freelance journalism assignments.
“I wouldn’t have much of a hope of paying for an expense over $500, much less $1,000,” Conzett said yesterday. “It is really hard to think about because my parents are going through a bankruptcy proceeding, so I really can’t rely on them for help. ... I would have to reach out to extended family members, and I don’t know how much they would be able to help me.”
Conzett recently used his ingenuity to avoid a major expense. After thieves smashed the window of his car in a break-in a few weeks ago, Conzett went to an auto parts junkyard and found a window that matched his car’s model and had his father, a mechanic, install it.
Delmar Plank, owner of Del’s Quality Exhaust & Auto Repair in Bath, N.Y., said he constantly sees people who walk out of his shop without getting needed repairs because they don’t have the cash.
“There’s people that come in here every day for exhaust work that needs to be done, and I give an estimate and they tell me they can’t afford it — I had two of those yesterday, as a matter of fact,” Plank said. “The economy sucks. People don’t have any money.”
Matthew LeLacheur, executive director of the New England Service Station & Auto Repair Association, said his members have increasingly reported people putting off maintenance work as long as possible to save money.
“There has been some belt tightening in the industry,” LeLacheur said. “You’re definitely seeing it more than you did three or four years ago.”
CRISIS OF CONFIDENCE
Americans aren't spending their way out of this one. Consumer confidence hits its lowest point in three decades yesterday — a dismal 54.9 points, according to a survey from Thompson Reuters and the University of Michigan. That's considerably worse than the 63 points expected by analysts and the 63.7 recorded last month.
Worryingly, respondents also blamed the government for the slide, saying high unemployment and the long months of intractability during the debt debate contributed to their fears. The survey asks 500 consumers 50 questions each month to gauge their financial situation and optimism or pessimism.
Survey data released yesterday showed that consumer confidence plummeted in August to the lowest levels since May 1980, and there may be good reason for people to feel glum. Another recent survey by the National Foundation for Credit Counseling showed that nearly two-thirds of respondents don’t have enough money saved to cover an emergency expense of $1,000 or more.
“A lot of people, no matter how hard they try, are living on the edge financially, and they’re only one paycheck or on unexpected bill away from financial disaster,” said Gerri Detweiler, a personal finance expert for Credit.com. “A lot of people are still pretty worried about whether they’re ever going to get to a place where they feel secure financially.”
The broader dive in consumer confidence reported Friday may have been influenced by very recent events, including the political fight over the debt ceiling, the subsequent downgrade of the U.S. credit rating by Standard & Poor’s and the wildest week on Wall Street in years.
In fact, retail sales actually rose 0.5 percent in July, the strongest growth in four months, according to Department of Commerce data released yesterday. But Stephen Stanley, chief economist at Pierpoint Securities, pointed out that the cascade of negative events that sent stocks tumbling occurred in August, the same time the consumer confidence survey was done.
“You do have some of the garden variety fear and uncertainty that goes along with lackluster economic conditions and concerns about a double dip, and certainly the drop in stock prices over the last couple of weeks isn’t helping,” Stanley said. “The question is always whether they end up translating into actual behavioral changes — do people stop spending?”
For some people, the question isn’t a choice.
Seventeen percent of the National Foundation for Credit Counseling survey’s 2,667 respondents said they would borrow money from friends and family to pay a bill of $1,000 or more, while another 17 percent said they would stop paying other monthly expenses. Taking out a loan or getting a cash advance on a credit card drew another 9 percent each, while 12 percent said they would start selling possessions.
Respondents took the survey on the foundation’s website — DebtAdvice.org — and may disproportionately represent those who are struggling. Still, there are plenty of people who can relate to the results.
Lance Conzett, 24, of Nashville, Tenn., said he would be undone by a large, unexpected bill. Conzett struggles to pay for his monthly expenses, which include payments on more than $30,000 in student loans, despite working full time as a technology analyst and supplementing that job with freelance journalism assignments.
“I wouldn’t have much of a hope of paying for an expense over $500, much less $1,000,” Conzett said yesterday. “It is really hard to think about because my parents are going through a bankruptcy proceeding, so I really can’t rely on them for help. ... I would have to reach out to extended family members, and I don’t know how much they would be able to help me.”
Conzett recently used his ingenuity to avoid a major expense. After thieves smashed the window of his car in a break-in a few weeks ago, Conzett went to an auto parts junkyard and found a window that matched his car’s model and had his father, a mechanic, install it.
Delmar Plank, owner of Del’s Quality Exhaust & Auto Repair in Bath, N.Y., said he constantly sees people who walk out of his shop without getting needed repairs because they don’t have the cash.
“There’s people that come in here every day for exhaust work that needs to be done, and I give an estimate and they tell me they can’t afford it — I had two of those yesterday, as a matter of fact,” Plank said. “The economy sucks. People don’t have any money.”
Matthew LeLacheur, executive director of the New England Service Station & Auto Repair Association, said his members have increasingly reported people putting off maintenance work as long as possible to save money.
“There has been some belt tightening in the industry,” LeLacheur said. “You’re definitely seeing it more than you did three or four years ago.”
CRISIS OF CONFIDENCE
Americans aren't spending their way out of this one. Consumer confidence hits its lowest point in three decades yesterday — a dismal 54.9 points, according to a survey from Thompson Reuters and the University of Michigan. That's considerably worse than the 63 points expected by analysts and the 63.7 recorded last month.
Worryingly, respondents also blamed the government for the slide, saying high unemployment and the long months of intractability during the debt debate contributed to their fears. The survey asks 500 consumers 50 questions each month to gauge their financial situation and optimism or pessimism.
