Between jobs going down and credit tightening up, consumers are feeling caught in the middle.
Friday’s jobs report was lousy. Unemployment surged, hiring was down, and wages are stagnant. As if that weren’t enough, a bank survey came out that showed lenders continue to tighten their standards. Just as an early freeze hurts the orange crop, the credit freeze has hurt consumers.
I suppose if you run a business looking for workers it’s good that more of them are looking for you. And if you’re a bank investor–like the U.S. government–then it’s good that banks are being more careful with your money. But the outright reduction in consumer debt coupled with loss of jobs has created a squeeze on the consumer that’s forcing him to pull back on his spending. That’s feeding back into the rest of the economy.
Eventually, we’ll get through this, probably after consumers increase their savings and home prices stabilize. But for now, the squeeze is on.
Douglas R. Tengdin, CFA
Chief Investment Officer
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