Stocks Nosedive as Consumer Spending Stalls
The Dow Jones Industrials dropped nearly 700 points reversing confidence levels and more than half of last week’s big gains
By Stacey Silberman
Paulson worst in history?
HOLLYWOOD, CA (Hollywood Today) 12/1/08 - According to all major indicators, the government, and mainstream media, the U.S. is officially in the throngs of a recession. Wall Street took another turn for the worst Monday, after dropping almost 700 points, taking back more than half of last week’s big gains. The Standard & Poor’s 500 index dropped nearly nine percent, as well as all major indicators, which fell more than seven percent today on news of weak consumer spending.
According to figures reported by the Associated Press, the market reacted today to a litany of negative economic figures that triggered anxiety on Wall Street, including a report from ShopperTrak RCT, a consumer research firm that surveys total retail sales at over 50,000 outlets. According to their figures, sales for Black Friday and Saturday combined rose only 1.9 percent from last year.
The market fell sharply on consumer spending worries signaling that the 2008 holiday shopping season would be catastrophic for retailers, despite the modest gain over last year’s figures.
The volatility in the market was spurred mainly by a lack of confidence in consumer spending and bad news from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. They both gave dim economic reports about the state of our manufacturing sector and the lack of construction spending, leaving investors reeling. When will the hemorrhaging stop?
Although consumer confidence reflected a better picture last week, leading to an optimistic 1,276 point gain over five sessions, the optimism may have been premature spurring today’s sudden volatility.
What’s interesting is the fact that today’s market madness was based on the confirmation of a recession, news that most of Main Street already felt, based on the price of bread.
Today’s news reminded our most educated analysts that the United States of America is in serious trouble.
According to the National Bureau of Economic Research, the recession got a foothold last year in December 2007. That admission caused panic as the retail sales figures appeared grim, despite the slight increase over last year.
“Unfortunately, two-thirds of the American economy is based on the spending of the American consumer,” said Mike Stanfield, chief executive of VSR Financial Services to the AP. “When the consumer pulls back, it’s very hard for the economy to gain much traction.”
It seems to be a vicious cycle afflicting the average person’s economic reality, with the added stress of negative media reports, and the trickle down effect on Main Street.
While investors had hoped for more stability in the market following last week’s rally, the market volatility is predicted to be like a roller coaster for the foreseeable future.
“Everyone knows the recession is on us, the question is now will it be short and shallow or long and severe,” Stanfield said.
While the economy hangs in the balance for all economic classes across the board, there are a few things that the average person can do, to help our country during this difficult time.
President elect Barack Obama suggested that people make an effort to be entrepreneurial. What can you do to make a small difference in your own life or in the life of your economic community?
It has been reported that certain areas of business are booming. One sector of business that has skyrocketed is the repair industry. Ask yourself what skills you may have and advertise your service in your local community. Even if only a small amount of income is generated, it will be extra income for you to spend, to stimulate your local economy.
Another idea is to sell things that you no longer need. Your trash is someone else’s treasure. Have garage sale, sell items on Ebay, Craig’s List, or go to the local thrift shop.
Jewelry, especially gold is at a premium, selling for over $800 per Troy ounce. Have a gold party. Invite your friends over for some light snacks and drinks and ask them to bring their scrap gold to be recycled into cash for discretionary income during the holidays.
This is the idea that I embraced after realizing my own finances came up short. After doing research into the industry and learning about what knowledge, training, and experience is necessary for the trade, I took the plunge. I invested my time and a little money into a new entrepreneurial venture that will help to stimulate my local economy.
Just call me the “Gold Party Girl.” The “Gold Party Girls” trained with some of the most experienced jewelers in the industry. We are experts in testing gold for purity, karat, and weight. We own state of the art equipment and have numerous character references. Contact us today to find out how to host a gold party in your home.
The Gold Party Girls is based in Los Angeles, CA and can be found at www.goldpartygirls.com. “Recycling Gold Into Green.”