The Consumer Is Literally Frightened

In my opinion, any economic recession is primarily driven by the negative mental attitudes of both the consumer and business owners rather than any amount of bad economic conditions.

If there is any fear in the minds of the consumer that they may lose their jobs, they will refrain from spending. When, business owners sense that the consumer is pulling back, they will, in turn, start letting people go and refrain from their own spending in an effort to preserve their profits. In a way, these fears, as harbored by both consumers and businesses, help to feed off of each other and a recession can get deeper and deeper; purely, for psychological reasons.

Yesterday, the Conference Board, a collective of more than 12,000 senior business executives, announced the results of their latest Consumer Confidence Report and their findings were greatly lower than had been expected. In fact, in a single month, the overall Consumer Confidence rating dropped by nearly 20% from a metric of 56.5% in January to a 10-month low of 46% in February (Click to See Full Story: Consumer confidence falls sharply).

Typically, when there is a reading above 50%, the majority of consumers are feeling good about both themselves and the economy; implying that they will probably spend. However, below 50% --- as in this report -- the consumer is likely to slow their spending because they don't feel good about themselves, their jobs, or the economy.

This is more proof that the American public isn't confident about their situations. It is also another slam against Obama and the Democrats because it shows that their fake and continuing mantra that jobs were saved and created isn't working and it isn't making people feel safe enough to start spending as if things were back to normal. People aren't buying it because they aren't seeing any results. The phony manipulation of the unemployment numbers isn't playing well either. And, it is just more proof that the Massachusetts election was a true referendum against Obama and the Democrat's policies and not simply a referendum against health care reform.