1 Boring Old Man

Nervous Days as Consumers Tighten Belts

Cowed by the financial crisis, American consumers are pulling back on their spending, all but guaranteeing that the economic situation will get worse before it gets better. In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even with the government beginning a giant bailout of the financial system, their confidence may have been too shaken to resume their free-spending ways any time soon.

Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores. When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades. Many economists, who began the third quarter expecting modest growth, now believe the cutbacks are so severe that the overall economy did not expand either, and they warn that a consumer-led recession could be more severe than the relatively mild one earlier this decade.

“The last few days have devastated the American consumer,” said Walter Loeb, president of Loeb Associates, a consultancy, who said he worried that the constant drumbeat of negative news about the economy was becoming a self-fulfilling prophecy. “They all feel poor”…

When our parents generation talked about the Depression years, they didn’t talk about the "Market." They talked about meeting each other, being with friends, having their kids, some about how they dealt with hard times – the events in their lives. Neither of my parents came from families that had anything, yet they made it through college during those years. My father in law couldn’t finish his engineering degree and went to work for the C.C.C. He and his new wife lived in a tent. When T.V.A. was formed, he went to work for them on day one – and stayed there until he died – never finishing his degree. Seemed like a happy guy to me.