Americans starting to regain confidence
The best news for the U.S. economy right now is that consumers are feeling better about the future and may be ready to open up their pocketbooks.
Yes, two of the nation’s three big auto companies are still in serious financial trouble, despite government help. Major financial organizations are struggling, even with government bailout money. The housing, construction and manufacturing sectors are still weak.
But the Consumer Confidence Index shot up more than 12 points in April, when compared to March.
That confidence has shown up locally in purchases ranging from new cars to recreational vehicles to electronics and other goods. Nationally, stocks that depend on consumer spending have also begun to rise.
Of course, there is no guarantee that the confidence will continue. Home prices are still falling across most of the country, although not as fast as they were, and unemployment remains high. Unlike more abstract numbers, such as stock markets or gross domestic product, those are two key economic factors that have a direct impact on individuals and how they spend their money.
Consumers could also be panicked by Wednesday’s report on the gross domestic product, which showed the overall economy performed worse in the first quarter of this year than many experts had anticipated.
But Americans are an optimistic and resilient bunch. The GDP report didn’t stall a stock market rally on Wednesday. Consumers may continue to stage their own rally, if general economic indicators continue to trend upward.
There is a lot of pent-up demand for goods from people who held off on major purchases over the past six to nine months. There also seems to be a growing desire to believe the slight upward ticks in the economy are real indicators of a fledgling recovery.
We hope none of this leads to “irrational exuberance,” to use a phrase Alan Greenspan made famous. And we definitely don’t want to see a return to the practice of people acquiring far more debt than they are capable of handling.
But increased confidence by American consumers will go a long way in helping the economy to truly begin turning around.