Sense on Cents

I am an eternal optimist. I would also like to think I understand the fundamentals of the economy, and that I present a balanced approach here at Sense on Cents. So let’s pursue the truth.

The market is being hit 1-1.5% today on a retracement in the Consumer Confidence report this morning. While the equity markets have had an enormous rebound over the last few months, there is little doubt that the divide between Wall Street and Main Street has never been wider.

What impacts the consumer? In my opinion, the noise on Wall Street does not impact most Americans. What does? Job status, home value, and access to credit.  How are Americans feeling on these fronts?

1. Jobs: the underemployment rate of 16.3% is forecasted to move higher and stay high. A little disconcerting, you think?

2. Home Value: foreclosures are continuing to surge, home prices are continuing to trend lower, and no reason for slowing on either front. Not generating lots of confidence here.

3. Credit: hat tip to MC from Investor Rebellion for sharing a story put out the other day by The Wall Street Journal which highlights how consumers’ credit cards are being discontinued indiscriminately without notice. This report, Cardholders Get Rude Surprise at the Register, is a true sign of the times.

Think about this scenario for a second. How humiliating and unsettling would it be to experience having your card rejected without notice. Do you think these people are going to rush out to do more shopping? Do you think their confidence may take a hit just a little?

Why is Wall Street, which is making all this “supposed” money and handing out enormous guarantees to certain employees, cutting credit lines? What do these banks see on the economic landscape?

Wall Street economists and analysts may be confident about future prospects, but I have yet to see one of them effectively address any of these three concerns which most impact Main Street.

LD

This entry was posted on Friday, August 14th, 2009 at 3:33 PM and is filed under Economy, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.