Americans Close the Checkbook ; in Another Sign of a Deteriorating Economy, Consumer Confidence Falls Sharply - Again
Ron Scherer writer of The Christian Science Monitor, The Christian Science Monitor
The Grochocinskis of North Carolina are further evidence that the US economy is in trouble. The couple went shopping for furniture last weekend, but after wandering through showrooms, they decided not to buy a new entertainment center.
"Now, I'm thinking of making it myself - anything to save a big penny here and there," says Paul Grochocinski, who lives in the Raleigh-Durham area and works for a high-tech company that's laying off thousands of workers.
Like the Grochocinskis, many Americans are starting to curb spending on big-ticket items in a further sign that consumer confidence - one of the key drivers of the US economy - is falling.
Many are brown-bagging it with baloney-and-cheese sandwiches. Others are laying off the credit cards. Most are definitely not pulling out the checkbook for expensive vacations or faux 19th- century armoires. Instead, they want to see what's going to happen with their jobs and the economy for the rest of the year.
The depth of the trend was underscored yesterday when the Conference Board, a business-research group, reported that its survey of consumer confidence slid sharply. The latest report shows that individuals now see their current situation as weaker. In past surveys, consumers only expected their prospects to decline. If this trend continues, "It is foretelling of economic hardship," says Lynn Franco, director of the Board's Consumer Research Center. But, she adds, "We're still not at levels we see prior to a recession."
How people perceive their future is critical to the well-being of the economy, since two-thirds of the nation's gross domestic product is related to consumer spending. Any shift in consumer psychology can impact auto manufacturers, airline companies, or, in the Grochocinskis' case, furniture production. Since mid-1997, confidence has been high, which has helped to buoy the nation's prospects.
The Conference Board report comes at a critical time for the economy. Over the past five months, consumers have been saying they're nervous about the future. Now, with layoffs spreading, people are beginning to feel the economy is worsening.
"What it could mean is that the consumer will be more cautious this spring than they were in the first quarter," says Stuart Hoffman, chief economist for the PNC Financial Services Group in Pittsburgh.
In fact, some economists believe the slide in consumer confidence may mean a slow economy for the rest of the year. …