By George Anderson
Consumers are generally very pleased with the quality of products they buy but they're still not spending. That is the takeaway from the latest American Customer Satisfaction Index compiled by the University of Michigan's business school.
Consumer spending, or the lack of it, says University of Michigan professor Claes Fornell, may simply be influenced by the fact that Americans are running out of money to pay for their purchases.
"There are two things that are necessary for spending. One is willingness to spend, which is really about the satisfaction, and the other is the ability to spend, which is being able to pay for it. Credit has not been a problem in the past, but we are a heavily debt-ridden nation. We may have reached a point where households are saying, 'Wait a minute, maybe we've gone too far.' "
Consumers' decision to say, "Wait a minute," may be the result of a combination of factors including higher prices, a weak labor market and higher interest rates, according to the authors of the study.
Consumer spending was up one percent in the second quarter.
Moderator's Comment: What is your takeaway from the University of Michigan's Customer Satisfaction Index findings?
During the six months we put in as a crewmember researching Trader Joe's last year, we worked with a number of people who were executives who found themselves out of work on September 11, 2001 or shortly thereafter.
Rather than go on unemployment after their severance packages ran out, they chose to make an honest albeit meager living working part-time at Trader Joe's. Even if they had been able to secure better paying full-time positions at the retailer, they still would have been bringing home only a fraction of what they had made before.
We know of more than a handful of people, mostly forty-something adults, who find themselves in similar situations, even though we're coming up on the third anniversary of 9/11.
Refinancing or taking equity out of their homes and juggling credit card debt is the new way of life for many. Buying a new car or a big screen plasma TV isn't even on the wish list anymore. It's on the wishful-thinking list. - George Anderson - Moderator