Consumers Gear Up for Lengthy Recession

The majority (86%) of US consumers believe the country is in a recession and more than half (54%) think the current economic conditions will last longer than 12 months, according to a the Nielsen Online Global Consumer Survey from The Nielsen Company, conducted last month.

Nielsen’s survey shows that when it comes to predicting the end of the recession, most consumers are pessimistic. Only 18% say they believe the recession will be over within a year.

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The least amount of confidence was expressed among 25- to 29-year olds, with just six percent saying the recession would be over within 12 months. More than half (52%) in this age range say they do not feel the recession’s end would come that soon.

Similarly, only seven percent of consumers age 65+ believe the recession will be over within the year, with 63% saying they don’t believe the recession will be over within that time frame.

“Younger consumers grew up in an era of prosperity and have never really known economic challenges to this extent,” said James Russo, VP, Marketing, The Nielsen Company. “To them perhaps, the current economic downturn is uncharted territory. There is a pervasive feeling of uncertainty and concern which is clearly affecting spending levels.”

Women More Concerned

Nielsen’s survey shows that more women (91%) than men (82%) feel the US economy is in recession. Men are markedly more optimistic than women about the recession’s end, with 27% responding affirmatively, compared with only 11% of women. When asked about the state of their own personal finances over the next 12 months, 39% of females responded “not so good” compared to 28% of males. Only 16% of women surveyed think their job prospects over the next 12 months will be good, compared with 26% of men.

Concern Crosses Age Groups

Nielsen’s research also shows that 38% of US consumers consider the economy their biggest concern over the next six months. The finding was fairly consistent across age groups, with older Americans even more worried: 48% of consumers age 50-54, and 52% of those age 55 - 59 cited the economy as their greatest concern. Among all US consumers, increasing fuel prices comes in a distant second place at 10%, followed by debt (9 %), increasing utility bills (7%), increasing food prices (5%) and job security (5%).

“Younger consumers have more time to weather the storm, rebuild their savings, and position themselves for growth,” said Russo. “It is worth noting, however, that older consumers, while understandably concerned, control nearly three-quarters of the net worth in the US and have done a better job of managing their finances with higher savings rates and lower debt levels.”

Belt-Tightening Strategies

Consumers are employing a number of belt-tightening strategies to help them cope with economic woes, Nielsen said. Trying to save on gas and electricity is cited by more than two-thirds (67%) of US consumers, while more than half of consumers (56%) say they are cutting back on out-of-home entertainment, spending less on new clothes (55%) and using their cars less often (54%). Just four percent report taking no action at all.

Saving Spare Cash

If they happen to find themselves with extra money in their pockets, the majority of US consumers say they are hesitant to spend it. Once they have covered essential living expenses, 38% put spare cash into savings, while 36% use it to pay off debts, credit cards or loans. Nearly a quarter of consumers (24%) report having no spare cash at all.

About the survey: The Nielsen Global Online Consumer Survey, conducted by Nielsen Consumer Research, was conducted from September 22 to October 6, 2008 among 28,663 Internet users - including more than 500 US. consumers - in 52 markets from Europe, Asia Pacific, North American and the Middle East. The half-yearly survey provides insights into current confidence levels, spending habits/intentions and the major concerns of consumers across the globe.

Comments

[User 265729:]

You should look again with your *on the ground* facts...

You are starting to see prices being broken down, starting with energy, while other prices are following... Without the credit based on a bubble there is nothing that people will buy.

Go to a grocery store... People are now hanging out in the flour and sugar section just like in the 1950's. Our supermarket used to carry specialty and a wide variety of items, but as they are sold off, only the basics remain. There is no market for anything...

The start of the price breakdown is more indicative of a DEPRESSION, not a recession. I've been through several recessions in my life and this is very DIFFERENT.

Whatever you call it, you are dreaming if you think this will last a few quarters or even a few years. This may last a decade or more...

We've lived the past 15 years off of credit based on something that was a bubble, we'll be doing without for 15 years in the future to reach parity.

2008 Nov 11 04:43 PM

[herbert hoover:]

It appears that the general public has more sense than Paulson and Bernacke put together. Of course it's going to be a long recession, made exponentially worse by those two geniuses thrwing tones of cash down a rathole to save their buddies on Wall Street.

2008 Nov 11 04:50 PM

[Daniel Herkes:]

The price points were inflated to begin with. The prices will come down, but not to depression standards. In 1932 twenty-five percent of the work force was no working. There were no public aid programs either. I do agree it will be a long while before the sense that it's OK to buy stuff comes back to many people.

On Nov 11 04:43 PM curbs-in wrote:

> You should look again with your *on the ground* facts...
>
> You are starting to see prices being broken down, starting with energy,
> while other prices are following... Without the credit based on
> a bubble there is nothing that people will buy.
>
> Go to a grocery store... People are now hanging out in the flour
> and sugar section just like in the 1950's. Our supermarket used
> to carry specialty and a wide variety of items, but as they are sold
> off, only the basics remain. There is no market for anything...
>
>
> The start of the price breakdown is more indicative of a DEPRESSION,
> not a recession. I've been through several recessions in my life
> and this is very DIFFERENT.
>
> Whatever you call it, you are dreaming if you think this will last
> a few quarters or even a few years. This may last a decade or more...
>
>
> We've lived the past 15 years off of credit based on something that
> was a bubble, we'll be doing without for 15 years in the future to
> reach parity.

2008 Nov 11 06:25 PM

[john1940:]

I don't know. I can't predict the future. But so far govts all over the world have thrown all they can at the problem and nothing sticks. I think this is the big one. We've been in this for over three months now and not ONE positive piece of data. Think "D" and long. There is no downside to preparing for the worst. If you are wrong, you will only miss the rebound and nothing else.

2008 Nov 11 11:05 PM

[Kunst:]

Bernanke and company are not going to allow deflation. There is no limit to the amount of money he and other central banks/governments can pump into the system. Sooner or later, the newly created money will exceed any possible asset destruction. If done on a coordinated international level, there may not even be a great disparity in impact on currencies. But real assets -- such as commodities and housing, even stocks -- will automatically inflate with the money supply.

2008 Nov 12 12:21 AM

[Steven Hansen:]

i'm with curbs-in. this economic event has features which scare me. a depression like the 30's - don't think so. it will have different features but will be serious none the less.

but the unwinding of bubbles and leverage will not be over next year. i hope the government is very careful in the way it tries to mitigate the effects of what is happening or we will be stuck in the twilight zone for decades - we must let the bubbles fully unwind.

2008 Nov 12 01:13 AM

[1776:]

Interest Rates [Credit] are the Cause and Consequence of
the Explosion of Income/Wealth Disparities and,
Hence, of the Inherent Instability of this Economy:

The Ominous Keynes' Liquidity Trap.
Origin of Economic Chaos.

As Far as we Know, As of Today No Other Economist Has Yet Discovered
The Link Between Income Distribution and the Liquidity Trap.

None of the Traditional Tools of Governements Will Work:
The Helpless Leaders of The G20 Countries Are Pathetic, Aren't They?


DIE ZEIT: Can the right monetary and fiscal policy keep the US out of a recession?

Alan Greenspan:

"Probably not. Global forces can now override most anything that monetary and fiscal policy can do.
Long-term real interest rates have significantly more impact on the core of economic activity than the individual
actions of nations. Central banks have increasingly lost their capacity to influence the longer end of the market.
Two to three decades, ago central banks were dominant throughout the maturity schedule.
Thus, the more important question is the direction of long-term real interest rates."

Chairman Sir Alan "El Maestro" Greenspan
The Great Irony of Success
© ZEIT online, 30.1.2008

Chart of Long-Term Interest Rates

When Long-Term Interest Rates Ar So Low As Not to Reward the Risk
People Stop to Invest. Wouldn't You? Who Can Coerce Them to Lose Money?

Because It Is Through Investments That Money Is Created.

The Blood of the Economy Stops to Flow,
It is the Ominous Keynes' Liquidity Trap, The Root of Economic Chaos.

The Crash Will Be Brutal, With NO Prior Warning...
You Need to Be Prepared.

1776- Annuit Cœptis Can't Avoid the Crash
it Can Shield You From Its Consequences

Everyone Need an Economy, Don't You?

There Is One Solution That Works:

A Credit Free, Free Market Economy:

What Else?... What Is Exactly the Other Option?

No One Will Chose the Chaos, Will You?

The Only Goal of 1776- Annuit Cœptis is to Implement It.

Anyone Can Join But Still Needs to Be Prepared. Shouldn't You?

www.17-76.net/

"At the present moment people are unusually expectant of a more fundamental diagnosis; more particularly ready to receive it; eager to try it out, if it should be even plausible.

But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.

Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.

Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. Emperors and armies come and go;
but unless they leave new ideas in their wake, they are of passing historic consequence.

I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval;

for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest.
But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil."

John Maynard "Invisible Hand" Keynes,
The General Theory of Employment, Interest, and Money,
13 December 1935, p. 383.
Quoted by Chairman Sir Alan "El Maestro" Greenspan
Adam "Defunct Economist" Smith
At the Adam Smith Memorial Lecture, Kirkcaldy, Scotland
February 6, 2005

The Purpose Is to Provide Both a New Deal and a New Game.

It is NOT to Fix This Economy Which is Already Beyond Repair.

The Intention Is to Create a New Economy
With the Assets of the Old One Without its Liabilities.

1776- Annuit Cœptis Will Jump Start Its Economy When:

It Declares the State of Systemic Economic Collapse (Market Crash)

AND

The Number of Its Registred Participants Reaches 100,000,000

Why Not Insure Against the Worst Case Scenario?

It Is the Age of Turbulence: Adventures in a New World Economic Order.


✔ Introduction

✔ Numbered Account

✔ A Credit Free Currency

✔ Assets Transfer

✔ A Specific Practice of Employment, Interest and Money


"Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic.

Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits—of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come.
Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;—
though fears of loss may have a basis no more reasonable than hopes of profit had before."

Sir John Maynard "Invisible Hand" Keynes
The General Theory of Employment, Interest and Money,
Chapter 12: The State of Long Term Expectation, VII
December 13, 1935


1776 - Annuit Cœptis www.17-76.net/

2008 Nov 12 08:10 AM

[WAKEUP:]

If this situation weren't so bad, I'd have to laugh at all these rosy scenarios that some commentors have. I've been commenting here for a year that this is a damned bad situation and that the U.S. is headed for 1955. The good news, if there is any is that at least for the first few years of this depression it'll be the high-lifers who suffer first. They will learn what it is to shop for bargain groceries, and realize that a car will last more than two years. Unfortunately there is no telling how deep this s--- will go, perhaps actually to starvation level for those not well-connected enough to outlast the mess that the damn foolhardy policies that the financial "leaders" and political hacks have pushed this once-great country into.

2008 Nov 12 03:33 PM