Business Report - 7/28/15: What happens in the economy when cons - Hawaii News Now - KGMB and KHNL

Business Report - 7/28/15: What happens in the economy when consumer confidence declines

HONOLULU (HawaiiNewsNow) -

Consumer confidence, as measured by pollsters, is reasonably high right now. But it has fallen a lot this month. So, who cares? What difference does it make?

70% of all U.S. economic activity is consumer spending. So imagine a consumer, watching the news. What does he see? The Greek debt crisis. The China stock crash. The ups and downs on Wall Street. Plus the economic fear-mongering attending with political campaigns.

Some consumers - and even some business owners - may become stampeded into thinking, I'd better be careful. I'd better spend less in case things go south.

It happens to the extent that a lot of people spend less, or delay investments, it becomes a feedback loop. It's another example of a recurring theme of these reports - that one of the scariest things about becoming an adult is discovering how little finance has to do with arithmetic.

A lot of it is psychology.

Copyright 2015.  Hawaii News Now.  All Rights Reserved.

Powered by Frankly