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August 30, 2005
I may sound paranoid but I'm really not
Over the next few days, expect pundits and experts to solemnly announce that the devastation caused by Hurricane Katrina is likely to cause an economic "soft patch."
Don't you believe it. The makings of that soft patch were in the works at least a week or two before Katrina evern touched our shores.
Observe.
According to a poll released by Gallup today, two-thirds of consumers were saying the economy is getting worse a week before the hurricane hit -- which, among other things, suggests that the modest slump in consumer sentiment measured by both the University of Michigan and The Conference board were "significantly out-of-date even as they were announced," according to Gallup's Dennis Jacobe.
Furthermore
| Past Gallup polling suggests that there is a severe psychological effect on consumers when gas prices at the pump hit $3.00 a gallon. Whether gas prices reach that level on average across the nation and whether it has a more severe impact on consumers or not, clearly today's gas prices and the plunging consumer expectations they create threaten another economic soft-patch. |
Unless something happens to turn this around quickly, look for sales slumps throughout the rest of the year, particularly for retailers and service providers serving low- to moderate-income consumers. Those will be the folks with the least amount of money left over to buy goodies once they finish feeding their cars.
And that may translate into some pretty dismal numbers during that crucial year-end holiday sales season.
Microbusiness owners should batten down the hatches. There's a very good chance that we're looking at some lean times ahead.
Posted by The Journal Blogger at August 30, 2005 03:56 PM
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