According to credit and collection news “A recession has occurred whenever the Sentiment Index has declined as much as it has fallen during the past year, including the recessions occurring from the mid-1950s to the early 2000s,” remarked Richard Curtin, director of the survey, which found that consumers were nearly unanimous in the opinion that the economy had already slipped into recession.
Consumers have adopted much more cautious spending plans, and are shifting more toward repaying debts and rebuilding their savings. The expectations index fell over 31% in March of 2008. This same index fell by 24% prior to the 1990 recession.
The majority if consumers receiving the tax stimulus package show indications that they plan to
pay off debt and rebuild savings.
“Consumers are now more in favor of repaying credit cards and rebuilding their reserve funds so they have the needed financial flexibility to handle any future twists and turns in the economy,” Curtin said Friday.
As we pointed out last month
Achieve Financial Security encourages this plan and suggests that in the long run you are much better off putting your money towards paying off your debt NOW rather than spending it on something else that could wait.
Especially with declining home values hitting a 20 year high. Over 35% of homeowners surveyed reported declines in home value as compared to 18% one year ago and only an only 3% 2 years ago.