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Sunday, June 13, 2010

Do Each of us Have a Role in the U.S. Recovery?

This past weekend, there was a very good story in the Washington Post that stated consumer confidence was increasing, but people were still not willing to spend their money – here’s the link.

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/11/AR2010061106305.html?sub=AR

When I think of “consumer confidence” I think of a single word – TRUST. Generally speaking, we either trust that things are good, ok or bad, from an economic perspective but there are several factors impact that trust.

Things such as high unemployment and inflation tend to make us more cautious with our finances. Conversely, a booming stock market pumps up our 401(K) and retirement plans, which can galvanize our personal perception of the“wealth effect” making us feel as if we can spend more freely.

Interestingly, the factor that we rarely hear about is that consumer confidence is somewhat of a self-fulfilling prophecy. If you believe things are good, your spending behavior reinforces that positive financial environment; however, if you think things are bad economically, your very hesitancy to spend cash is a small drag on the marketplace – and if enough people “drag” together a recovery is slow coming.

The self-fulfilling nature of our collective consumer trust reminds me of a quote by industrialist and automotive pioneer, Henry Ford who said, “If you think you can do a thing or think you can't do a thing, you're right.” That’s solid wisdom.

And it’s a critically important statement for us to trust as consumers.

Because it is our individual spending, combining together as a massive buying block, that is the single biggest factor of economic growth – bar none. It’s not government spending that will end this recession, it’s the investment and spending of “We the people” that will create new jobs and opportunities for others.

Again it comes down to a question of trust, which brings up a lesser-known quote by Henry Ford regarding where he placed his personal trust during the darkest economic period of our country - The Great Depression of the 1930s.

“I believe God is managing affairs and that He doesn't need any advice from me. With God in charge, I believe everything will work out for the best in the end. So what is there to worry about,” said Ford.

Many people balk at that type of statement as sentimental puffery, especially when God and economics are used in the same breath. But what is more ironic, a millionaire who successfully trusted in divine providence through The Depression, or a nation of modern hand-wringing consumers who don’t know whom to trust today – even though it’s printed on our currency “In God We Trust.”

4 comments:

  1. Tor, you are one of the winners of Max Lucado's Fearless book from Gather Inspirit. Please email me your address and I will get it sent out to you. amy.gatherinspirit@gmail.com

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  2. Hi Amy, Thanks for the comment!

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  3. I never knew this about Henry Ford..must be one of those things that gets left out of the history books! This was one of my favorite posts, Tor.

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  4. @Kim, thanks for the kind words! As always you're my biggest supporter, and I'm humbled to have you in my life. "Luv ya' like a crazy!"

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