As the economy continues to struggle, consumer's are losing more and more confidence in the nation's ability to rebound from the recession. Economists believe Americans will remain in a financial funk until they start seeing fundamental improvements in the economy. But that is not the case as the 2008 Consumer Confidence Index reports 37.7 - less than half its level of January 2007. Lynn Franco, director of The COnference Board Consumer Research Center says, "it appears that consumers have begun the new year with the same degree of pessimism that they exhibited in the final months of 2008."
The low index score is especially bad becasue until considerable imporvement in consumer confidence is accoplished, the wrost of times are not behind us. Economists closely watch consumer confidence since consumer spending accounts for more than two-thirds of economic activity. As economic activity continues to slump, more companies are forced to layoff its employees in order to decrease expenses. Accordingly, the Labor Department announced that state unemployment rates show up nationwide in December.
President Obama's plan for a $825 billion package of increased federal spending may encourage Americans to spend more, but the proposed plan would only be a temporary relief. But without the help of consumer spedning, the economy faces a slow recovery. With that said, I feel that no matter how temporary the relief, it is a necessary step for future stability and economic growth.
By Andrew Cho
Sources:
http://www.msnbc.msn.com/id/28873574/
http://krugman.blogs.nytimes.com/2008/02/15/the-consumer-is-always-right/
http://news.yahoo.com/s/ap/20090127/ap_on_bi_ge/consumer_confidence
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