I had no idea it was this bad! (I wonder how accurate the graph is?)
It’s going to be tough for consumers to spend more when the value of their assets has tanked but the amount of their debts hasn’t changed.
ADDED: Which reminds me. People focus on consumer confidence but consumer sentiment doesn’t matter much when consumers can’t borrow more to spend more.
I met a gentlemen, Bob Eggert of Blue Chip Economic Indicators fame, who said during one economic downturn when he was at Ford Motor Company he predicted sales would increase soon. He said the consumer had already paid off debt during the downturn so they now were able to take on more debt and buy more cars whenever they, the consumers, decided they were ready. And that’s exactly what happened. Soon consumer confidence improved and consumers started borrowing more money to buy more cars.
My point is that until the consumer has more credit available, consumer confidence is not a great economic indicator. And it could take a long time before consumer balance sheets are strong enough that their access to credit is increasing instead of decreasing.