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August 04, 2021

Consumers still spooked, saving for 'inevitable unemployment'

By Jason Buckland, Sympatico / MSN Finance

Remember the scene in Conspiracy Theory  when we first get a look at Mel Gibson’s apartment?

He had all those crazy telephoto lens pictures stapled up everywhere and kept that upside-down glass bottle on top of his doorknob so no one could break in undetected and you’re thinking to yourself, Man, this guy is seriously paranoid.

Well, call it what you want, but this still-broken economy – about a year into our Canadian recession – still has most of us spooked, too, according to a new survey from Bloomberg.

The study, based out of the University of Michigan, shows the U.S. consumer confidence index fell in July for the first time in five months as “mounting unemployment and stagnant wages shook households.”

The index, which gauges the consumers’ perception of their financial situations and whether it’d be a good time to buy big-ticket items like a new car, suggests the overwhelming majority of people don’t think things will be much better in the economy six months from now, either.

This fear of pending doom – the Consumerist suggests everyone is “scared to lose their jobs, still saving for their inevitable unemployment” – is still apparently causing a deadlock in healthy consumer spending which, as you might know, is a prominent key to jarring the world out of recession.

“The consumer isn’t going to be a leader in this recovery,” says Nigel Gault, a chief U.S. economist who accurately predicted the consumer confidence drop. “Any recovery in consumer spending will be very, very modest.”

Indeed, while it’s become apparent more people are shopping now at discount retailers like TJ Maxx (the U.S. version of Winners is one of the few stores posting gains in recent sales), the issue brings up an intriguing debate on the psyche of the North American consumer.

While paranoia is certainly not the word, it appears at least that conservative saving for your own affairs isn’t doing the world’s economy much good right now.

So, then, where do our financial obligations lie? Some are going to argue that we need to spend with some degree of normalcy to bring things back to ordinary, but it’s also tough to blast anyone for putting aside money in a rough time for their family’s long-term security.

But, which camp are you in?



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...