Economists to Keep Eye on U.S. Consumers for Early Clues on Impact of Stock Crash
Currier, Chet, THE JOURNAL RECORD
Public opinion polls, surveys of consumer sentiment, reports on retail and auto sales and many other statistical measures all will come under close scrutiny.
In the immediate aftermath of Monday's $503 billion drop in the market, the widely voiced concern has been that consumer spending might weaken, thus extending the impact of the stock market decline into other areas of the economy.
Since the big drop, the market has staged a partial recovery, recouping $60 billion in value Tuesday and another $180 billion Wednesday.
But those raw numbers can't begin to measure what changes the fall in stock prices from late August through early this week have engendered in the feelings of the public.
``Confidence is a fragile thing, and once it has been damaged it's a hard thing to restore,'' said David Resler, chief economist at Nomura Securities International in New York.
Simple logic suggests that people whose stock or mutual fund investments tumbled in value might well be cutting back on their spending plans, even if they didn't actually realize those losses by selling their shares.
Even people who had no stake in the market in theory could become more wary, questioning the security of their jobs or just experiencing general doubts about what the future holds.
The drop on Wall Street came as an abrupt change after a bull market that had been casting a positive light on economic news for five years.
Nevertheless, some observers say there is a chance that the market's reversal won't have such a drastic an impact on consumer habits, given the unusual circumstances of recent years. …