Consumer confidence"Consumer sentiment tumbles to historic low"
-- Reuters

"Economic gloom puts stranglehold on spending"
-- Pittsburgh Tribune-Review

"Wall Street plunge could cut consumer spending by $140B"
-- USA TODAY

With headlines like these, high unemployment, debt-ceiling drama, and a rocky stock market, who wouldn't feel down in the dumps about the economy? So most people do what comes naturally during scary times -- we scrutinize our spending and cut back on dining out, movies, and back-to-school shopping. Then we wait for a bigger sign from on high that things are looking up.

Since much of what fuels a recovery is simply consumers starting to feel like things are going to get better, economists and journalists rely on "consumer confidence" metrics to take our overall temperature, and then tell the general public how everyone else is feeling about their finances.

Therein lies the rub: The more we hear those gloom, doom, and despair headlines, naturally, the more our perception of the economy worsens and, as a result, our confidence levels fall even further.

Consumer confidence

Cracking the Consumer Confidence Code

The bureaucratic-sounding phrase "consumer confidence" really just means how optimistic you and I -- the "consumer" -- feel about the economy. If we're feeling good, chances are we're spending more. If we're worried, we're usually spending less.
There are a few different ways to measure it, but the most popular is the Consumer Confidence Index, a monthly survey of 5,000 households. The numbers are reported every month and then, of course, analyzed to death, which is how we know that consumer confidence is the lowest it has been since 1980.

But as each of us tightens our belts a notch, there's a ripple effect that spreads throughout not only the U.S. economy, but around the world.

Bad Attitudes Travel Fast

Think I'm exaggerating? Consider that consumer spending drives 70% of the economy. If we stop spending, businesses stop hiring and stores stock fewer goods. Then the factories here and abroad that make those goods lay off workers, those workers then spend even less, and so on until we're in a downward spiral.

That's an oversimplification of course, but it's not that far off from reality.

So what does it take to turn consumer confidence around and shake the nation out of the recession? Step 1: Ignore the gloom-and-doom headlines. Step 2: Make the recession work for you.

Four Ways to "Play" the Recession

If you're in a good financial position -- stable job, low or no debt -- there are ways to not only survive but thrive during a downturn. And in doing so, you'll contribute to that 70% of the economy that relies on consumer spending. Here are four ways you can rock the recession.

1. Leverage low rates: The sluggish economy is keeping interest rates historically low, meaning that this is a great time to take out a loan if your finances allow. Mortgage rates in particular are a bargain, so if you've been planning to buy, refinance, or renovate, now may be the time.

2. Work the sales: Lower consumer spending means lots of markdowns as merchants try to entice us to shop. If you're watching your own wallet, take advantage of these deals to stretch your dollars.

3. Keep spending close to home: When you do spend, consider supporting local businesses, which are often taking the hardest hit from the recession. Buying made-in-America products is another good move -- it creates and maintains domestic jobs and reduces our dependence on imports.

4. Go shopping for stocks: When the market drops as dramatically as it has the past few weeks, consider picking up a few shares of your favorite companies. During the recent downturn, I bought a couple of shares of Apple (AAPL), a company I've always wanted to own, for nearly 10% off their high, and added to my position in another favorite holding, Berkshire Hathaway (BRK-A). Keep a watchlist of stocks you like so you know when their prices drop more than usual.

Motley Fool contributor Robyn Gearey owns shares of Apple and Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway and Apple. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.



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firebee34

Oh, and I know Ron Paul is a Republican, but he will never get the Republican Nomination.... So I will bet he will run as an Independent. I am a registered democrat but am bipartison.... This guy is the only one in Washington DC who actually knows whats going on. WE ARE BEING ROBBED BLIND PEOPLE, WAKE UP!!!

August 23 2011 at 5:49 PM Report abuse rate up rate down Reply
firebee34

My God.... why don't more people see what is REALLY going on here? Democrat or Republican, same B.S. different name. Vote Independent.... I just hope it isn't already to late. Ron Paul 2012 ... and even I don't know if he can stop this disaster in the making.

August 23 2011 at 5:43 PM Report abuse rate up rate down Reply
Michael Boyle

There is not much Obama or Bernanke or anybody can do to fix the economy. It is not a machine that we can oil and grease to run at a certain pace. Our problems are not because of what we are doing today. But they are because of what we have done for many decades.

Inflation or deflation, the outcome is going to be the deduction of the real value of debt from the money supply. What was borrowed will be paid back one way or another. If Bernanke prints too much, savers will pay alot. If Bernanke prints too little, borrowers will pay a lot. But at the end, when the dust settles, it does not matter who pays in a global economy. Deflation is more likely than inflation in the near term. This is because if Bernanke does not print, then it is outright deflation as debt deflates. If Bernanke prints too much, then creditors will not lend at low rates, thus reduction in credit supply will be deflationary for credit dependent markets such as housing. In any case, deflation means pool is shrinking.

www.kondratieffwavecycle.com/credit-inflation/

August 20 2011 at 6:13 PM Report abuse rate up rate down Reply
gbe

WHAT OBAMA CAN'T DO, THESE 7 EVENTS CAN EITHER DESTROY YOU OR MAKE YOU RICH

*** globaleconomicbreakdown.blogspot.com ***

I urge you, watch this eye-opening video on my blog and find out how the global economic crisis will change the way you live.

I'm posting my blog video here because I need to reach out to the real people who are effected by the Global Economic Crisis. Please pass this video on.

August 19 2011 at 2:06 PM Report abuse rate up rate down Reply
wch2011

Perhaps the President should read this. His custom bus was built in Canada. That's right folks. And then he has the nerve to tell people that they should buy "made in America". This guy is a JOKE. A JERK. A Ja..O..! Get him out in 2012!!

August 18 2011 at 9:02 AM Report abuse +1 rate up rate down Reply
martinsportraits

In the years to come you will find out what Darwinian survival of the fittest really means , There is a storm coming the likes of which you can't even imagine , all these Stories you are being fed by the Wall st and Government controlled media are designed to blind you to How precarious the situation has become and to instill confidence in you to give them your last tangible wealth.....this country is absolutely finished , rotted from within ....the greed, corruption and bought politicians from both parties, corporate monopolies, mass outsourced labor , War for profit , corporate bailouts , completely fraudulent figures .....Case in point , the Dept of labor and its recent unemployment report , Could there really be anyone naive enough to think that the unemployment rate is hovering at 9 percent , the real figure is easily above 15 !

August 18 2011 at 5:31 AM Report abuse +1 rate up rate down Reply
savemycountry911

Why should we have confidence in a tanking economy? We're "strewed" and the people know it.

August 17 2011 at 10:29 PM Report abuse rate up rate down Reply
maloontransllc

Gas price is the problem. These mtr fckrs in the white house and in Congress need to be tried for treason and then hung. Just like in Iraq and now in Egypt you rob the people you pay with your life very simple but effective, wall streeters and speculators can all stand together.

August 17 2011 at 9:22 PM Report abuse rate up rate down Reply
filmnd

According to Robyn Gearey we should fool ourselves, and be given information by the government and media that everything is great no matter how bad it is, so that we will all spend money we don't have, and go deeper in debt. The is the same philosophy our oun governmnet uses that put us in trillions of dollars in debt. Should those who are unemployed not believe the media as they exhaust their last benefits? Next, the article states how to survive, and actually succeed, in a down turn, "if you're in a good financil position- stable job-low or no debt". This position, it seems, is a dwindling demographic. So which is it- do I spend, spend, spend, and put myself into debt because I have some disposable cash thereby helping the economy or hang on until real economic improvement surfaces? What would you do, Ms. Gearey?
I think improving the economy has better solutions than all of us sticking our head in the sand as our proverbial asses are getting chopped off.

August 17 2011 at 9:00 PM Report abuse rate up rate down Reply
acaddybrougham

gas prices are killing this economy who can afford to go any where when you spend all your money on gas why are gases prices not going down? 3.75 a gallon in florida bring gas prices down then consumer confidence will go up obama and these politicians know this but they are in the pockets of big oil so they do nothing

August 17 2011 at 9:00 PM Report abuse rate up rate down Reply