Economic growth can and will be impacted if consumer confidence continues to decline.
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New York, NY;Washington, DC;Los Angeles-Long Beach, CA;Chicago, IL;Houston, TX (PRWEB) December 14, 2012
Investment Contrarians, an e-letter of Lombardi Publishing Corporation, a 26-year-old consumer publisher that has served over one million customers in 141 countries, warns that while consumer spending has been relatively strong, concerns about U.S. fiscal policy and the fiscal cliff are weighing negatively on consumer confidence. If consumer confidence continues to erode, this will certainly impact economic growth in 2013.
In a recent Investment Contrarians article, financial expert Sasha Cekerevac observed that when it comes to forecasting economic growth, one has to pay close attention to consumer confidence. For developed nations, domestic spending makes up a large portion of an economy.
Recently released data from Thomson Reuters/University of Michigan and their Consumer Sentiment Index showed a reading of 74.5 for December. November’s reading for consumer confidence was 82.7. The decrease in consumer confidence was the weakest in four months. (Source: “Michigan Consumer Sentiment Declines More Than Forecast,” Bloomberg, December 7, 2012.)
“While economic growth has been weak for most of 2012, spending by consumers was relatively strong. However, I believe the increased discussion regarding the fiscal cliff issue and the constant bickering and ineptitude of politicians in averting drastic changes to fiscal policy is now weighing down consumer confidence. This increased awareness of the potential for a massive decrease in economic growth in 2013 will certainly continue to weigh down consumer confidence,” said Cekerevac.
While home prices and modest job growth are positively impacting consumer confidence, the implementation of the fiscal cliff will have an extraordinary impact on economic growth. Most Americans were, by and large, unaware of how severe the situation could become in 2013, according to Cekerevac. Now that more and more news organizations are reporting on the fiscal cliff, Americans are more cognizant of the dire circumstances, and consumer confidence is being negatively impacted.
According to the National Retail Federation, the four-day Thanksgiving weekend generated $59.1 billion in sales, an increase of 13% from 2011 levels. While that’s a good number, last year’s Thanksgiving weekend generated an increase of 16% from the prior year. It appears that consumer confidence weakness is starting to seep into spending decisions, which could impact economic growth in 2013.
It’s never easy building consumer confidence, especially when economic growth is weak, according to Cekerevac. The politicians in Washington are making the situation much worse by continually dragging their feet and kicking the can. Both citizens and businesses can deal with changes to the economy; uncertainty is a different matter. When the future tax and fiscal policies are unknown, it is extremely difficult to build a long-term strategy.
“Economic growth can and will be impacted if consumer confidence continues to decline,” Cekerevac said. “I believe that if the politicians can think about the long-term future of the country for once, we can build certainty through permanent structural reforms that can be the foundation for long-term economic growth.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, and to get its popular Investment Contrarians e-letter sent to you daily, visit http://www.investmentcontrarians.com. Or, visit http://www.lombardipublishing.com/customer-service.html.