Consumer Surrender

Two sure signs the consumer is moving back to saving instead of spending.

  1. Starbucks says it’s going to cut 600 stores and lay of 12,000 Barristas.
  2. Auto sales fell across the board. Chrysler fell 36%. Unilike GM and Ford, they have no foreign business where both have been selling fuel efficient cars for years. Chrysler is road kill. The LBO can’t support all the borrowed money. As usual, Chrysler executives are in a total state of denial as if $5 gas is just a temporary problem.

Auto executives had little choice but to take a philosophical view of the market. “This too shall pass,” said Steven J. Landry, head of North American sales for Chrysler. “When it does, we want to be prepared.”

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0 Responses to Consumer Surrender

  1. garyb50 says:

    I quibble with that ‘back to saving’ comment.

  2. woodnsoul says:

    I think most folks are into paying their gas bills and mortgages. Savings is a bit far out to show up on the radar scopes of the average person, I think.

    You’re right about the economy being less than robust, in fact, quick ill in many quarters.

  3. Ken Ballweg says:

    Would agree that “back to savings” is not the prime reason Starbucks is cutting back. Delusional over expansion of the franchise, (for example having three stores in Tillamook which has a population of 4,200 and five other espresso business) has finally caught up with Starbucks mothership. The delay in recognizing the hole they were digging could make them the poster child for American businesses right now.

    That it is a sign of stagflation (Warren Buffett) or a full recession (79% of those polled by CNN May 7th this year) is unquestionable. The only questionable part is whether the panic will come before or after the election.

  4. Dan says:

    October may be a month fraught with interest in re the Dow. Make the popcorn and pull up a chair. It should be quite a show.

    Should we start a pool on how long it will be until our fearless Congress approves a gigabillion dollar bailout for Chrysler, thereby recreating the late 1970’s down to the last detail except for Jon’s striped trousers and mutton chop mustachios?

  5. zestypete says:

    In the UK, the number of high interest savings accounts on offer has almost trebled in recent months, as mortgage and other cheap loan offers go into severe decline – this is a clear indicator of where the market’s going. As Ken B says, closures like the Starbucks situation are to be expected, as companies take advantage of downturns to cut staff and blame it on the economy. If banks think there’s money to be made in savings “products”, that’s a pretty clear indicator that they’re not expecting to be handing out money to anyone anytime soon and it’s going to be some time before that changes.

    Analysts here are not predicting improvement until late 2009 at the earliest and friends are already being told that their jobs aren’t safe (not that publishing jobs are ever safe), so expect more of the same for the time being.

    PS I think the economy would benefit greatly if Jon would return to his striped trouser and mutton chopped ways. In fact, Jon, if Obama wins, I think you should celebrate with a little victory dance in the outfit in question. Perhaps a dance like this one: http://www

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