Photo: DanielleCM via flickr
Consumers yearn to shop, but that doesn’t mean they’ll be hitting the mall anytime soon.A phenomenon known as pent-up demand, when “consumers pine for things they can’t afford,” has kept the economy from reaching its post-recession phase, reports USA Today, and until the job market improves–and consumers start spending again–businesses will remain reluctant to hire, keeping America mired in what some experts have called a Catch-22.
“Consumers are very apprehensive and cautious in spending, and we expect that to continue,” Diane Swonk, chief economist at Mesirow Financial, told USA Today.
But the bad news doesn’t end there. Fearful baby boomers are keeping their wallets shut, and as they age at a quickening pace–1.9% for those ages 50-64 versus 0.1% for those ages 15-49–they likely won’t be spending for years to come.
Global economic woes have also kept America in gridlock.
rumours of Greece’s default left other countries concerned for their futures, wondering how they could invest abroad when they’re unsure of their own currency’s worth.
Closer to home, America’s politics became the focus of endless scrutiny, as the ongoing debt ceiling debates brought the country closer to default and political stalemates on both sides of the aisle heightened consumers’ fear. The nation’s credit rating took a devastating hit from Standard & Poor’s as a result, and angry consumers reacted by ceasing to spend, which in turn caused retail sales to plunge.
Now many consumers are driving their cars a little longer. According to the latest auto data from Polk, an auto industry research firm, the average car on the street is nearly three years older today than it was in 1995, a fact that not only hurts car dealers, but affects the hundreds of companies manufacturing auto parts.
For America to find the light at the end of the tunnel, it still has a long way to go.
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