Yahoo has two articles today that tell how employers added jobs last month, but consumer confidence remains at a two year low.
Analysts said continued gains in hiring showed the economy was not at immediate risk of crumbling onto recession despite strains from a weak housing sector and credit tightness. But a later report showed consumers’ moods grew darker in December.
Come on, America! This is December, the shopping season! Why do you have to be so negative? Have you no faith in our strong economy. Wall Street and Washington are working together to ensure that there is enough credit to go around for everyone.
“There’s a great deal of angst out there,” said economist Ken Mayland, president of ClearView Economics. “There is a great deal of fear and foreboding.”
Economists said a host of factors were to blame for the still gloomy mind-set of consumers. The collapse of the housing market, which has dragged down home values, has made people feel less wealthy. Home foreclosures have shot up to record highs. Harder-to-get credit has made it difficult for some to make big-ticket purchases. High energy prices are squeezing wallets and pocketbooks. And, Wall Street’s gyrations have made some worry about the value of their nest eggs.
Those gloomy consumers need to get out to a mall, that will make them feel better. Just like the rise of the housing bubble made consumers feel and spend as if they were wealthy (even though they really weren’t), the collapse of the bubble (which is still collapsing) is causing people to feel less wealthy. Are consumers starting to see that wealth is more closely tied to their savings or investment account than some imaginary number given by a home appraiser?
The high energy prices that we’re currently paying are insignificant compared to the value of all the home equity extractions that have taken place over the past few years. Despite that, there seems to be some psychological effect that high oil prices have on consumers.
What are home equity loans for? Borrowing against the value of the home for vacations, that new car, or maybe putting some of it back into the house. The fools who borrowed against the value of their home and spent it on vacations and cars, probably were doing so with the intention of a growing housing market boosting home values. Maybe they could sell later and not have to worry about that cash money. Look at the current situation; it’s far from what the experts referred to as a strong market.
Now, how about the smart people who invested that money in their home. Chances are that they, too, didn’t get what they had hoped for. Imagine putting $50,000 into a home worth $250,000. That $50,000 will not immediately boost the value of the home my that much. With the recent increase of homes on the market due to foreclosure, the responsible home owner is suffering too!
In a “free market” is it right for the government to step in and freeze interest rates??? I understand that this issue affects many people, but is this good for the economy? The markets ( especially housing and lending) should be free from government influence. Supply and Demand should drive prices. When things get bad due to shady lending practices, the lenders should be responsible. It is irresponsible to reward people for being unable to pay their bills. Many do not read the lender agreements, so who should really take the blame? Government intervention is not helping the issue, only prolonging it. Home values are not going to boom anytime soon, and in 5 years when those rates are “unfrozen,” I wonder what gas prices will be.
Also, what about the others who already lost their homes to foreclosure? It is not fair to freeze interest rates while others had to suffer. Everyone who is financially irresponsible should have to deal with the consequences.