Consumer spending is at an all time low in the United States; this means less money is put into the economy and less money spread around. According to a recent Pew poll, 73 percent of Americans intend to spend less on the holidays this year.
In this video economic reporter Paul Solman talks to behavioral economists, the head of the consumer confidence index and consumers to get to the bottom of the why we are not spending and what it could mean to the economy.
"This is about as bad as it gets." -Lynn Franco, Head of the Consumer Confidence Index
"Last Christmas, I probably spent like $500 to $600. And this Christmas, maybe like $300, $200 to $300." - Consumer
"Right now, people are scared. They're seeing unemployment go up. They're seeing their stock portfolios go down. They're seeing the value of their houses go down."- David Wyss, Senior Economist, Standard and Poor's
1. What is consumer confidence?
2. What is a recession?
1. Think about your spending this year, has it gone up or down? Why?
2. Do you feel fearful of the economy? Why or why not?
3. Some of the consumers said they thought it is patriotic to shop, do you agree? Why or why not?
4. Can you apply the dog experiment to other parts of your life? Do you feel more likely to act when you can connect a cause with an effect? Give an example and explain how it either supports or contradicts the theory.
Ask Paul Solmon your own economic questions at his blog: