Here's a shocker: consumer confidence in the United States is down the most since Hurricane Katrina hit two years ago.
Honestly, what do consumers have to be confident about? The markets are up and down – but mostly down... jobs aren't exactly plentiful, wages are going nowhere... mortgages are harder to pay... houses are worth less and are sitting on the market for longer... paying off your credit card with your home equity line of credit is nearly impossible and groceries are more expensive because of the ethanol fraud.
And when people aren't feeling "confident" they are less likely to go buy any "big ticket" items – such as cars.
Auto sales have been weak this year – and if the data from August, which is reported on September 4, is negative, it will be the sixth month this year and the third month in a row that sales have been down.
This time, the problem is not high gas prices...a CNW Marketing Research national survey of 14,000 consumers showed 18% of those who chose not to buy a car cited home-related issues.
"Nearly two-thirds of those said it was due to a decline in home equity, and 36% said it was because their mortgage payment increased."
Well, well. It seems like people are starting to catch on – for now.
From the Chicago Tribune:
"Richard Apicella, an auto finance executive at Atlanta-based Benchmark Consulting International, says the bad news about subprime mortgages and home values may be scaring consumers who have prime credit - the ones more likely to have home equity - into holding on to their money, making sure they can pay the mortgage before taking on new debt.
"'Maybe they're starting to realize they're not as rich as they thought they were,' he said."
Are the rose-coloured glasses slipping? We shall see...
Kate Incontrera
for The Daily Reckoning Australia
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About the Author
Kate Incontrera is the managing editor of The Daily Reckoning. She is also the author of The Daily Reckoning's Weekend Edition, a weekly wrap-up of contrarian investment analysis.
