September's Consumer Confidence Index Data - What It Means For You and Me
Read More: Originally posted at Corporate Professionals and the Global Economy
The Consumer Confidence Index data in September, 2009 fell to 53.1 from 54.5 in August.
You are probably asking, “So what’s the big deal? Only a 1.4 drop. And who even cares anything about the Consumer Confidence Index data?”
The big deal is:
1. The Consumer Confidence Index measures the confidence level the US consumers have in the future of the economy. If they don’t have much confidence, they are probably not going to spend much money.
2. The index had risen for several months in a row. Economic experts had expected a continued rise in confidence for the month of September. They had projected a 57.0 level – far above the actual number.
3. Even more important, the lower number for September indicates that US consumers are probably still having a difficult time dealing with the unprecedented shock that occurred to their wealth over the last several months.
This is why some of us have a very cautious outlook on the long term economic recovery.
The US consumer doesn’t appear to have the means or the desire to start spending. Without a rise in personal consumption expenditures, the economic recovery is in trouble over the long haul.
Personal Consumption Expenditures
As we all know, consumers make up approximately 70% of our Gross Domestic Product through their spending on goods and services. They have suffered significant losses in the value of their homes and investments. They have gone deeply into debt over the years.
Consumers are in the process of paying down their debt. We are seeing an increase in the US savings rate . That means that the consumer is saving more and spending less.
The consumers are taking prudent action. By saving and paying down their debt, they are improving their personal balance sheets. As a result, the US economy will be stronger in the long run. But lower personal consumption expenditures (a result of the lower Consumer Confidence Index data) will limit any attempted recovery.
The savings rate fell from around 10% in the 1980s to a negative rate last year. Personal debt as a percentage of disposable income went from 65% in the 1960s to 130% last year. These were both very negative trends.
While the US consumer is bringing down their debt load, the federal government has increased their debt to record levels.
What I’m saying here is that it will take many, many years to unwind this massive debt. As a result, I feel that personal consumption expenditures will be a drag on the economy for a long time.
What does this mean for you and me?
It means that corporate professionals should not get too excited about the current economic recovery. I just don’t think it will last. I hope I’m wrong about this.
This low level of personal consumption expenditures will result in very slow growth in our economy. Unemployment rates will remain at fairly high levels. We will not see a significant rise in home prices.
It wasn’t long ago that I was able to retire from my Chief Financial Officer position in corporate America. This was before the economic downturn began.
Fortunately, I had a job backup plan. I considered many income alternatives. I then decided on a professional internet marketing business career. This may not be the path you want to follow. But because the economy will probably remain sluggish for many years, I suggest you have some type of backup plan.
My job backup plan was to get internet marketing training. This approach allowed me to continue to work at my regular job.
When I found the right business, it wasn’t long before I was able to retire.
Getting the right internet marketing training was the key. You will not be able to succeed without it.
If you ever want to discuss your options to get out of corporate America, give me a call or send me an email. I would be happy to help you if I can.
Scott Hubbard has retired from 25 years as a Chief Financial Officer in corporate America. He teaches corporate professionals and network marketers how to start a successful internet marketing business. You can learn more about Scott by visiting his blog at http://YourGuideToRetirement.com.
You can reach him toll-free at 877-878-4036 or by email at Scott@ScottHubbard-Consulting.com. His primary business, http://Your-Guide-To-Wealth.com, has provided the general guidance that individuals need to make good financial decisions in economic downturns as well as in expanding markets.
Views: 511 | 
Comments: 12 
Become The Smart Backup To Your Financial Future
Our economy is certainly not rosy. And as people flock to the Internet to make that extra revenue, many are left disillusioned because they fell for the quick get rich schemes that abound on the net.
But once you realize that it all hinges on learning the correct information from a source you trust then it all changes and you become the person you can count on for your financial future.
Listen to Scott, he knows what he's talking about!
A Plan B
Hi Scott,
I read another of your articles and the comment I left there also applys here. Here it is.
This sure does paint a bleak picture. Fortunately, there is a way out. Thank you for pointing to that. If not for a plan B, many people would otherwise be in dire straights.
Working at home is a great plan B, but being sure to get the correct training is vital to finding success in that chosen business. You mentioned a great training resource. Thanks.
I sure hope you are wrong about our economy, but, thankfully, I also have a business which, hopefully will do fine through any economical hardship.
Michelle
Making Sense of the Data
Well Scott,
I would say, that it behooves us to pay attention to your insights. The media would have us believe we are in a slight recovery. Here in Canada, the dollar is high, which apparently isn't good and on it goes.
Keep us updated as you watch the events unfold.
Thank goodness that entrepreneurship allows those of us who will, to create our own futures.
Ignorance is bliss...
or is it? To survive in these economic times it is imperative to be armed with good information. This is a piece that helps make sense of what is said by the media and polititians.
Thanks for enlighting us.
Economic Survival
We all need to take our own economy into our own hands. Depending on others to provide us with a living is not what is going to get us through in any recession. Creating our own wealth is creating our own futures.
Your insight and passion is wonderful.
The Economy Sucks...
Accepting the fact the economy sucks, and taking action to help changes ones situation is the first step towards recovery. One needs to learn skills that can benefit others in making an income or dealing with survival. Michell is correct training is vital, and watch trend go hand in hand to arming one for success.
The Future of Home Business is a Bright One!
Many people, more than ever before starting home businesses. The goal is to educate them to make the right decisions on which opportunities to bank their time and money on. Great article Scott!
An Update at My Level
I'll admit, I don't follow the news like I should. I usually wait and hear news updates from my husband rather than watch the news or read the paper, because of the negativity.
But, I really appreciate reading an article like this that cuts thru all the fat, and states an opinion with facts that make it simple and clear.
An Evolution
I originally bought into the "survivalist mentality" when I heard of all the people hunkering down to wait out the down turn in the economy. Many people have just laid down by the side of the road to their dreams, waiting for this economy to get better. I think more and more are realizing that they are the economy. That those who rise up and move forward, one step at a time, consistently and persistently, educating themselves to new trends will be the ones who will lead the way to a new economy.
Changing our Mindset, when our situation changes, has got to be an integral part of our ongoing personal development. We have to be nimble enough to see the change, analyze it and grow from it.
Having A Back Up Plan
Scott, You are right on in your assessment of a slow recovery. It took years to make this mess and it's going to take years to get out of it. The answer doesn't lie in hoarding what money we have, but in creating new money. An internet home business is a great answer to that because of the relatively low start up cost and the reach of the internet. Thanks for a very thought provoking article.
Breath Of Fresh Air...
Scott,
I have the same sentiments as Becky. I don't watch the news either. And that's only because of the negativity. My husband usually tells me whats going on too! So it was like breath of fresh air to read your article to know what's truly going on.
Thanks,
Donna
Small Business
I also hope that we will see a fast recovery, but we should prepare for the worst. If you can take control of your future, such as with a home based business, you will not be held prisoner to the economic ups and downs. As recently noted on many news shows, it is small businesses that really drive our economy.