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ISR’s January 2008 Reuters/University of Michigan Surveys of Consumers Claim Wealth Disparties Intensify

February 16, 2008


According to the Reuters/University of Michigan Surveys of Consumers, one of the most widely-cited surveys in the United States conducted by the Institute for Social Research (ISR), one of the oldest social science research organizations, and a world leader in the development and application of social science methodology, wealth disparities continue to intensify. There is a gaping difference in how income groups experience the financial situation. ISR Director Richard Curtin warned that the the “largest proportion of consumers in nearly two decades reported financial distress, especially households with incomes below $75,000. economic” and that, “Households with incomes under $75,000 were twice as likely as higher income groups to report that their finances had worsened due to both higher food and fuel prices as well as smaller income increases. “Over the past decades, whether inflation was much higher or lower, or incomes grew faster or more slowly, there has never been such a wide divergence in the experiences across income groups.”

Curtin, Richard T. 2008. “Consumer Growth Engine: Barely Above Stall Speed.” Reuters/University of Michigan Surveys of Consumers. January 2008. PR200801.pdf

“Although there was a small recent gain in consumer sentiment, confidence remains significantly below last January’s level, declining by one-fifth during the past twelve months. [. . .] Higher food, gas, and heating costs as well as declines in the value of homes and stocks left nearly every consumer feeling more vulnerable. “Consumers have adopted more cautious spending plans, with the expected growth in real personal consumption spending starting at about 1.0% in the 1st quarter of 2008 and then rising slowly in the balance of the year,” according to Curtin. Residential investment will continue to slump until late 2008 and then begin to grow very slowly.

The risk that a recession develops remains uncomfortably high. “The most likely prospect is that the rate of overall economic growth will be about zero in the first half of 2008, with nearly equal probabilities that it will be slightly above zero as slightly below zero,” Curtin said. The surveys have continued to record the largest gap in more than a quarter century in how different groups assessed their financial situation. [. . .] More homeowners reported that their home had lost value than reported it had increased for the first time in the nearly two decades the question has been asked. “The housing market will not benefit as quickly as in the past from cuts in interest rates given the near universal rise in credit standards as well as continued declines in home values making even refinancing more difficult,” Curtin noted. [. . .] The increase in job and income uncertainty has affected vehicle buying plans. Overall, vehicle buying attitudes in January were the least favorable since the 1990-91 recession (Curtin 2008-01).”

CC Flynn-Burhoe, Maureen. 2008. “ISR’s January 2008 Reuters/University of Michigan Surveys of Consumers Claims Wealth Inequalities Continue to Increase.” >> Google Docs. Uploaded February 15, 2008. http://docs.google.com/Doc?id=ddp3qxmz_519fxqgr5gv

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