The Economic Environment and the Mind
I go to the supermarket to buy financial newspapers once or twice, sometimes three times a week. Lately, a new experience has emerged. When I place the WSJ or the FT in front of the cashier, he or she (usually she) comments on the economy and/or the headlines on the front of the paper. The tone of the voice is not one of small-talk. Rather, there is a sense of uneasiness. I get asked questions. What does this mean? How bad is it going to get? And get told stories. My son is moving home because he lost his job. Or, I am afraid my son is going to have to move home if he loses his job. Americans, all of us, are feeling the pinch. The American psyche is is in the process of coming to grips with a brave new economic world.
A systematic study of this psychology was released today -- a measure of 'consumer confidence.' From an AP report:
Consumer confidence plunged to its lowest on record in October, a private research group said Tuesday, as stock markets dropped sharply and companies laid off workers.
The Conference Board said the consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts' expectations of 52.
That's the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop. A year ago, the index stood at 95.2.
Americans are indeed feeling the pinch.