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One analyst at an institutional investment firm isn't surprised about the credit market's ongoing malaise, noting the consumer psyche is helping to prolong the belief of an extended slowdown, which in turn causes lenders to pull back even more.
"The hope at retail for the recovery from the stimulus checks has dissipated. The consumer has spent the rebate checks on food, gas and paying down debt....Sales will get worse before they get better, and you'll see department stores become more promotional," the analyst said.
Recent readings of the American public's mood have done nothing to foster optimism about a turnaround in retail activity.
The Reuters/University of Michigan Surveys of Consumers placed consumer confidence at a 28-year low on Friday. Earlier in the week, the Conference Board's monthly consumer confidence monitor for June dropped to its lowest level in 16 years amid growing concerns about high prices, falling home values and a tighter job market.
The Conference Board's monthly Consumer Confidence Index is now at 50.4, down from 58.1 last month. The two key components both fell this month — the Present Situation Index, to 64.5 from 74.2, and, reaching an all-time low, the Expectations Index, to 41 from 47.3.
UBS chief economist Maury Harris said the index, a key measure of consumer economic sentiment, is "now much weaker than the lows during the 2001 and the 1990-1991 recessions. It looks more than low enough to be consistent with the contraction in real consumption."
The index fell as low as 70.7 during the 2001 contraction and to 55.3 during the 1990-91 slump.
James Schaye, president and ceo of Hudson Capital Partners, a liquidator, is a pessimist, even though the downward trend would be good for his business.
"A pickup in the economy? No, not at all," he said. "I am very pessimistic, and I think this will last for at least the next nine months. People will get accustomed to high energy prices, but right now there is a genuine downturn in the economy and it's challenging for consumers because it's hard to absorb $4 and $5 for a gallon of gas. Even for those with large disposable incomes, when you stand at the pump and watch that dial ringing up $80 and $90 for a tank of gas, it may not be meaningful for the individual's bottom line, but it is from a psychological viewpoint."
"The hope at retail for the recovery from the stimulus checks has dissipated. The consumer has spent the rebate checks on food, gas and paying down debt....Sales will get worse before they get better, and you'll see department stores become more promotional," the analyst said.
Recent readings of the American public's mood have done nothing to foster optimism about a turnaround in retail activity.
The Reuters/University of Michigan Surveys of Consumers placed consumer confidence at a 28-year low on Friday. Earlier in the week, the Conference Board's monthly consumer confidence monitor for June dropped to its lowest level in 16 years amid growing concerns about high prices, falling home values and a tighter job market.
The Conference Board's monthly Consumer Confidence Index is now at 50.4, down from 58.1 last month. The two key components both fell this month — the Present Situation Index, to 64.5 from 74.2, and, reaching an all-time low, the Expectations Index, to 41 from 47.3.
UBS chief economist Maury Harris said the index, a key measure of consumer economic sentiment, is "now much weaker than the lows during the 2001 and the 1990-1991 recessions. It looks more than low enough to be consistent with the contraction in real consumption."
The index fell as low as 70.7 during the 2001 contraction and to 55.3 during the 1990-91 slump.
James Schaye, president and ceo of Hudson Capital Partners, a liquidator, is a pessimist, even though the downward trend would be good for his business.
"A pickup in the economy? No, not at all," he said. "I am very pessimistic, and I think this will last for at least the next nine months. People will get accustomed to high energy prices, but right now there is a genuine downturn in the economy and it's challenging for consumers because it's hard to absorb $4 and $5 for a gallon of gas. Even for those with large disposable incomes, when you stand at the pump and watch that dial ringing up $80 and $90 for a tank of gas, it may not be meaningful for the individual's bottom line, but it is from a psychological viewpoint."
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