(WBBM NEWSRADIO/AP) – Why do consumers seem to have a cautious outlook about the future, amid good economic indicators?
U.S. consumer confidence has fallen for a third consecutive month as optimism about job prospects and business conditions down the road grow weaker.
The Conference Board said Tuesday that its consumer confidence index edged down to 125.9 in October, compared with 126.3 in September. Perceptions about the present situation improved, but future expectations frayed.
Diane Swonk, chief economist for Grant Thornton, told the Noon Business Hour Tuesday that consumers may still be haunted about the Great Recession that began in 2008, even during the current economic expansion. She likens it anecdotes about survivors of the Great Depression who kept shoe boxes full of money as they awaited the next catastrophe.
“There is a legacy effect of the Great Recession on us today,” Swonk said. “And it really has created more of this self-fulfilling prophecy. I don’t think we’re there yet, and as long as things stay calm -- your guess is as good as mine on that -- but if things stay calm on the trade front and we don't have another flare up on that front, consumers can make it through the holiday season."
Consumer confidence is closely watched for indications of whether households will keep spending. Consumer spending accounts for 70% of economic activity.