Consumer Confidence Drops in September to a 7 Month Low….

Sept. 28, 2010 - PRLog -- Andover, Massachusetts September 28th, 2010 –  While the stock market continues to rebound well in September and the recession has now “Officially” been over for over a year, consumer confidence remains well below a healthy level. In September the consumer confidence index dropped to 48.5, down from 53.2 in August and well below what is considered a healthy level of 90. While a drop was expected, the size of it was not. So what does this mean for the economy and your families’ finances?

Before we start fear mongering again about a double dip recession keep in mind that general economic indicators over the past month have been surprisingly positive. Private sector hiring has increased, the trade deficit has dropped, housing prices are on the rise, new unemployment claims are down, industrial production is up, and the stock market is reaching heights not seen since the beginning of the recession. So, although consumers remain extremely skeptical of the recovery, businesses are seeing improvements across the board.

While this is all good news, it is vital that consumer confidence start to rebound. Businesses have been reorganizing and improving productivity through job cuts since late 2008. This has allowed corporate profits to remain high and with it stock prices while hurting those on Main Street without a job. But productivity gains can only get you so far. Eventually, demand will have to pick up or the recovery will begin to lose steam. Remember, consumer spending makes up 70% of the US economy, so without consumer demand the economy will not reach the 3%+ in GDP growth that is needed to significantly cut unemployment numbers.

Either way, this news does not impact the recovery at the moment. But for a sustained recovery that lasts well beyond this year the US economy needs consumers to regain the confidence that they had before the recession. Increased confidence will lead to increased demand for not only basic goods and services but also luxury goods and services. I consider this index to be a lagging indicator in that it does not forecast confidence into the future. Instead what it does is gauge the mood of consumers based on how they have dealt with the economy in the past. I expect this number to go up as Businesses start to hire more workers again heading into the holiday season.

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

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Contact:
Stephan Tavernini
Marketing Coordinator
Certified Educator in Personal Finance
Preferred Financial Services
stavernini@pfs1.net

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Preferred Financial Services is the leading voice in the debt settlement industry. PFS has worked with hundreds of creditors to help negotiate realistic goals for those drowning credit card debt.