Bankrate.com says that consumer spending is the single most important factor in building a strong economy, and once again, notes that the intractability in Congress which this time led to federal employee furloughs damaged consumer confidence.
According to Bankrate’s monthly measurement, 72% of all consumers surveyed are cutting back on spending. The reasons: 32% cite stagnant income, 24% feel the need to sock cash away in savings, and 20% cite worries about the economy. Only 27% say they feel no need to watch how much they spend.
“With hundreds of thousands of government employees furloughed and many government contractors reeling from the shutdown, feelings of job security plummeted to the lowest level in nearly two years,” says Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Seventy percent of the economy relies on consumer spending, so when this many consumers are cutting back, it’s going to be hard for the economy to get out of first gear.”
Consumer sentiment slipped for the fourth consecutive month and now sits below the par score of 100 at 97.4. Employment security also slipped among those currently working, particularly in the age 50-64 demographic.
The survey was conducted by Princeton Survey Research Associates International.
RBR-TVBR observation: It’s bad enough that we’re seeing another study confirming a downturn in consumer confidence; it’s worse that it’s happening right as the holiday shopping season is kicking into gear; and it’s unbelievable that once again Congress, rather than helping build confidence, is hastening the decline.