Eco 101 or Econ 101?
With the U.S. energy policy in tethers and the clowns in D.C. fiddling as the U.S. economy rolls over, retailers are becoming nervous about holiday sales. No one knows the costs of regulations from health care to financial reform, and Congress is pursuing new energy policies.
This has been a very hot summer in the Northeast and the cost of energy for stores has skyrocketed. Also consumers are paying heavily to stay cool, so much so that they appear lethargic and less likely to shop or go to restaurants and bars. Higher store costs and less consumer dollars to buy back to school supplies, clothes et al are not a good combination.
On a trip from eastern Long Island to New York City, a woman in her early 80s pointed to many empty billboards in Queens just before reaching the Midtown Tunnel. She said she had been away from New York City and Quogue for several years and was surprised how many empty stores there were in New York and how many houses were for sale and for rent on Long Island.
“It looks as if we’re heading back into recession,” I said. Her reply was, “I don’t think we ever came out of the last one.” Collective or personal perceptions are critical to economic recovery. Wall Street and government economists get paid to be cheery. Wall Street economists want you to buy stocks, while government economists want you to re-elect their bosses.
A frightened populace, which is where we seem to be now, keeps a tight grip on pocketbooks when there is no or little certainty. Presently Nancy Pelosi and Barack Obama appear to be double-dribbling between the likes of Cal Coolidge and Herbie Hoover, attesting that everything will work itself out given time.
On Tuesday, consumer confidence in July dropped again. It was 62.7 in May and has retreated to 50.4 now.