Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=210395
Story Retrieval Date: 7/28/2014 9:23:35 AM CST
Helen Dampier (left) is "keeping positive" about the economy, while Tony Pietramale (right) does not plan to cut back spending this festive season.
Upbeat Chicagoans plan to spend as usual during festive season
Not long after the tri-colored confetti was swept away at McCormick Place, attention shifted back to the fast-approaching “fiscal cliff,” a series of tax hikes and spending cuts that could send the U.S. economy into a double-dip recession. Jittery investors caused markets to tumble Wednesday. However, commuters and workers at Union Station in Chicago generally did not appear to be overly worried and said they do not plan on cutting back on spending this holiday season. That could be a positive sign for the Michigan Consumer Sentiment Index, which will be released Friday for the month of November.
In an informal survey at one of Chicago’s major transportation hubs, 7 out of 10 people said they had a positive outlook for the economy in 2013. In addition, all of them said concern about the fiscal cliff will not affect their spending plans this festive season. That’s good news because consumer spending accounts for 70 percent of the economy.
“I’ve gotten my trips scheduled just like normal so I will probably end up spending the same amount during the holidays,” said Taylor Phelan, a 23-year-old freelance designer from Logan Square. “I’m pretty optimistic and I run around with quite a lot of optimistic people and they’re pretty upbeat about what’s going to happen to economy next year.”
Phelan’s upbeat attitude is consistent with what consumers have been telling researchers recently. The Michigan Consumer Sentiment Index, which looks at consumers’ views about their own financial situation and their outlook for the overall economy, has been ticking upwards in recent months. Fueled by easing gasoline prices and an improving housing market, the index hit a five-year high in October, with the final reading rising to 82.6 from 78.3 in September.
The improving mood among consumers was echoed by the Consumer Board’s consumer confidence index, which climbed to its highest level since 2008 last month.
Helen Dampier, a 59-year-old store assistant from the Far South Side, said she is “keeping positive” despite worries about Wednesday’s stock market plunge. “It was pretty concerning for people with 401(k)s like me because that’s your future,” Dampier said. “But I’m sure it’s only temporary and things will get better.”
Sergio Sandizo, a 43-year-old from the Northwest Chicago who works at the Mrs. Fields and TCBY store in Union Station, shared this optimism. “The economy is going to get better,” Sandizo predicted. “It’s going to take a little longer to see a difference but I know it’s going to get better.”
Rising consumer confidence has translated into a slight increase in customer numbers for Sandizo, and he expects business to “pick up as the holiday season sets in.”
Steven Todd, a finance professor at the University of Loyola Chicago’s Quinlan School of Business, says consumer confidence is usually related to paychecks and everyday expenses. “I think the biggest short-term determinants are usually highly related to what’s going on in the consumer’s pocketbook--like how much they’re spending on gas and food and the things they buy regularly,” he explained.
For Sherry Johnson, a 55-year-old research administrator from Ann Arbor in Michigan, economic uncertainty will not push her to cut back on what she “usually spends during the holidays.” However, Johnson was doubtful that the economy will improve next year. “I think things aren’t going to get any better because I am pretty skeptical about what Obama will be able to do for the economy.”
Brad Gietman, a 22-year-old pre-med student who is in his senior year at the University of Wisconsin–Madison, agreed. “I don’t think things are going to get better; it’s going to stay the same.” But Gietman was hopeful about a recovery in the long run. “If we get the right legislation in place, we could turn things around in 10 years.”
But in the meantime, 71-year-old business owner Tony Pietramale from Western Chicago says he will continue to spend normally this holiday season. He plans to do whatever is needed “to keep the grandkids happy this Christmas.”