Consumers gloomy, but their spending says otherwise
WASHINGTON — Economists have advice for anyone worried that consumers are too fearful to keep spending: Look at what they're doing, not what they're saying.
A survey of consumer confidence shows that Americans were spooked early this month by the standoff over the debt ceiling, a downgrade of U.S. long-term debt and a swoon in stock prices.
The Conference Board said its consumer confidence index sank to 44.5 in August, a 15-point drop from July. That was a much sharper fall than analysts had expected. And it brought the index to its lowest point since April 2009. A reading above 90 would show the economy was on solid footing.
But the decline in confidence may be temporary. If stock prices stay steady, consumers will likely keep spending, and the economy should improve modestly in the months ahead, economists say.
Automakers to make more compacts
With consumer confidence at its lowest point in two years, you'd think auto companies would make fewer cars to get ready for slower sales.
Not so, at least for compact cars. General Motors is adding Saturday shifts in the fourth quarter at an Ohio factory that makes the compact Cruze, two people briefed on the matter said. Ford, Toyota and Hyundai also have scheduled overtime at compact-car plants.
All are expecting increased compact sales as nervous consumers go for lower sticker prices and better gas mileage to save money. Also, car companies are trying to steal sales from Honda and Toyota, whose factories are just now recovering from parts shortages due to the March earthquake and tsunami in Japan.