Toby Smith

Consumer Spending Falls Sharply

by Toby Smith   10/20/08

The end result has been a huge loss in confidence in the U.S. stock market. Sixty-nine percent of respondents said they're less confident in the U.S. stock market than they were 90 days ago. Only 7% said they are more confident.

The immediate repercussion of the crisis on investors is also clear.

When we asked respondents where they would be investing more or less money, we picked up a huge outflow from U.S. stocks (-20), mutual funds (-14) and non-U.S. stocks (-6), and a major inflow into cash (+24), gold (+22), income/dividend vehicles (+11) and other commodities (+8).

To compound matters, 66% of respondents said they think the overall direction of the U.S. economy is going to worsen during the next 90 days -- a huge 27-point jump since August, and the worst reading in the past year.

Clearly much of this sea change is related to the credit crisis and other recent events in the financial markets.

In the aftermath of the approval of the bailout bill, our current survey points to continued turbulence in the stock market. As the survey shows, we're in the midst of another major leg down in the consumer-driven economy with no signs of a turnaround in sight.

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Toby Smith is the founder and editor of ChangeWave Investing and ChangeWave Inner Circle. Read his bio here.