A change in general sentiment about debt marks the start of deflation

The influence of perception:
As important as what goes on, is what people think that is going on…

Using Google Trends to Predict a Recession

Mish’s Global Economic Trend Analysis: Changing Social Attitudes About Debt

Here is a sampling of the headlines.

* U.S. consumers pull back on spending, worry more about debt as economy weakens
* Consumers are cutting back
* US consumers worry about debt, pull back on spending
* Consumers pull back as economy weakens
* Americans buckle up for slowing economy
* Empty Malls as Economic Fears Spread
* Americans tightening their belts
* Consumers now spending less, worrying more
* More consumers start to show financial restraint

Changing Attitudes Are Now News

Even Starbucks is affected.

The AP is reporting Starbucks tests $1 coffee, free refills. “Faced with growing competition from cheaper rivals, Starbucks Corp. is selling small cups of drip coffee for $1 with free refills as part of a test in its hometown.”

Coffee is a minor thing, but unwillingness to spend $5 for a cup of coffee had to start sometime. This attitude is spreading. And it’s the attitude that’s important, not the coffee.

Bernanke can’t reflate if consumers won’t spend, banks won’t lend, and businesses won’t expand. If prices are coming down (as they are with houses), consumers will wait. Those worried about their job will wait. Those starting to worry about retirement will wait. People will wait for houses, cars, and boats. People will vacation closer to home and spend less eating out. People will cut back in all sorts of ways.

January 27, 2008 · Filed Under Interesting tidbits, Society

Comments

Leave a Reply