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By Montag | Related entries in EconomyThe Associated Press reports:
Americans’ anxiety about the economy and their jobs resurfaced in July, sending a widely followed measure of consumer confidence downward and ending a three-month winning streak.
The Conference Board said Tuesday its Consumer Confidence Index fell to 103.2 from a revised 106.2 in June. The July figure was worse than the 106.2 analysts expected, but was still considered solid.
In May, the index rose to 103.1 from April’s 97.5.
Lynn Franco, director of the private research group’s Consumer Research Center, said the dip was “no cause for concern.”
“The overall state of the economy remains healthy and consumers’ outlook suggests no storm clouds on the short-term horizon,” Franco said in a statement. “Even the steady upward tick of fuel prices at the pump has done relatively little to dampen consumers’ spirits. Yet, while there is little to suggest a downturn in activity, there is also little to suggest a pickup.”
Associated Press: Consumer confidence dips on job worries
But there is something else that could very well affect consumer confidence and the consumer spending that “accounts for two-thirds of all U.S. economic activity.” [ibid]
Within the next month, Bank of America, MBNA and Citigroup will raise minimum monthly payments on their cards from 2 percent of the balance to up to 4 percent, not including interest. Other card issuers are expected to make similar changes by the end of the year.
Yahoo! News: New Credit Card Payment Requirements Bring Good, Bad News [Via Majikthise and uggabugga.]
The “good” of course is the long term effect that borrowers will spend more responsibly and pay off balances more quickly. The “bad” is the short term impact this will have on current balance carriers. Simp, A commenter to the uggabugga post has a suggestion to limit this impact:
A smarter way to do it is to impose it for all new credit lines and either leave existing accounts alone or, bring it up very very gradually.
So what are consumers going to do? Will increased credit card payments, along with gas prices and inflation concerns affect consumer spending? Are faltering consumer confidence figures to worry about, or are things as rosy as Franco maintains? What of Simp’s suggestion to ease the impact of increased credit card payments?
This entry was posted on Wednesday, July 27th, 2005 and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 28th, 2005 at 12:39 am
Simp’s suggestion of more gradual change is good — all too often reform involves a massive price shock. I recall bread riots in Africa when price controls were eliminated and bread more than doubled in price (Nigeria?)
The EU wants to eliminate subsidies on sugar beet. ALL of them, in one shot.
This is stupid. 10% a year for some years, or 1% per month for many months, are much better gradual changes.
MBNA should go 2.5% for 6 months, 3% for 6 months, 3.5% for 6 months, and then be at 4%. (or go up by .1% each month: 2.1, 2.2….)
The rising interest rates in the US means the big deficit is too big; prolly unemployment is TOO LOW (at about 5%). But the lack of big headlines about unemployment, since it is so good (too pro-Bush), is prolly why the confidence is low. Trade deficits don’t matter so much; budget deficits do, and interest rates, and employment. Economy watchers need to keep watching the same important indicators.
August 7th, 2006 at 8:30 am
Good job.
October 30th, 2007 at 5:53 am
Weight Loss Guide…
I couldn’t understand some parts of this article, but it sounds interesting…