President Bush is asking Americans to conserve gasoline by
holding off on unnecessary trips.
Does that include a jaunt to the mall? A visit to a favorite
If shoppers do stay away, most economists say it will
significantly slow the nation's economic growth, which for the past
several years has been fueled by the willingness of consumers to
spend. But even before the president's call, some retailers say they
notice consumers becoming thriftier. The penny-pinching also comes
at a time of rising interest rates for credit cards and nonstop news
about hurricane flooding.
The cumulative effect: Tuesday, a consumer confidence survey
showed the sharpest drop in 15 years, which could foreshadow a
slower growth rate in consumer spending.
"Consumers are stressed," says Anthony Chan, chief economist at
JPMorgan Asset Management in Columbus, Ohio. "Consumers are at the
Some analysts think Mr. Bush is doing the right thing by asking
Americans to think about their driving habits. They argue that if
shortages crop up and Americans can't get gasoline, no matter how
much it costs, the the damage to the economy would be magnified.
"The consequences are more serious," says Mark Zandi, chief
economist at Economy.com. "Right now there is zero margin for error.
Nothing can go wrong."
Bush's call for sacrifice is reminiscent of 1977, when Jimmy
Carter asked Americans to turn the thermostat down to 65 degrees F. -
three degrees lower than President Nixon proposed during the Arab
While Bush has not gone that far, some consumer experts worry
that Americans may pull back too far. "There is a risk consumers
will take the president's remarks as an indication that the
situation is more serious than expected," says Richard Curtin,
director of consumer surveys at the University of Michigan.
Tuesday, some of that concern was reflected in the Conference
Board's consumer confidence index for September, which dropped 19
points. "This was reflecting the gasoline prices and all the human
lives lost to Katrina," says Gad Levanon, an economist at the
Conference Board, a business research organization. "We think it
will fade away to some degree in the next several months."
The survey results mirror those at the University of Michigan,
which has seen the steepest fall in confidence ever. "I think their
concern will be heightened by the president's affirmation," says Mr.