The Dow dropped 265 points today to fall below the 12,000 mark. This is the longest losing streak since 2008. The start of 2011 the Dow was at 11,500 and gradually rose to over 12,500, once in May and twice in July. But the last week has been just peril.
Investors are showing their worry about the recovery of the economy and it showed all day long as sellers outnumbered buyers four to one. This was the eighth day of the Dow decline which lost a total of 858 points adn finally closed at 11,866.
The reports show that the economy was growing at less than 1 percent with further decline in June. This is the slowest since the Great Recession of 2009. With everyone’s pay staying level, a decline in homes sales, decline in home’s values, and unemployment not getting any better, Americans have showed more caution and have been spending less.
The government’s report says that consumers spent 0.2 percent less in June and this was the first decline since 2009 of June. This is big news since 70 percent of economic growth is fueled by consumer spending.
Its clear to see that consumers are putting more of their money in their bank accounts than they normally do. Their jobs are very scarce, they hear that their relatives and friends are jobless and are having a hard time finding new jobs and they then therefore are not visiting the malls as frequently as they use to. And its not only the malls, auto dealerships show decline, housing sales are down, furniture sales are down, and home appliance sales are down.
Some of the automobile makers are saying that a lack of discounts and a shortage of Japanese cars are keeping buyers away. This has caused auto sales to sputter for a third straight month.
With most of the spending cuts coming in 2014, there might be more damage coming to the economy soon. The lackluster economy is going nowhere fast and consumers have finally started to pull back on their spending. Well, not really, consumers have pulled back, but it only really shows up in the economy around each quarter, like a three month latency.