A Lack of Confidence Despite Bailout
Even though the US congress p
assed a $700 billion dollar bailout package last week many Americans lack confidence in the current economy and are uncertain about the future. This uncertainty has affected consumer spending with many putting off major purchases and spending less on consumer goods and services.
The Credit Crunch and the US Economy
Credit is a major part of the US economy and with the current credit crunch many Americans are finding credit much harder to come by. Due to the subprime mortgage mess banks have tightened lending requirements putting access to credit out of the reach of many Americans. Since consumer spending is one of the leading economic indicators a reduction in retail sales could have serious ramifications for the economy across the board. Despite the passage of the bailout bill and the rally of the US dollar on forex markets many Americans find themselves faced with hard economic decisions to make.
Rising Food and Fuel Prices
The last few years have seen rapidly rising prices for both food and fuel. These rapidly rising prices negate any gains in wages leaving many in financial straits. Rising fuel costs translate into higher utility bills and transportation costs. Small businesses across the country are feeling the pinch and many credit card companies have raised rates drastically. One Seattle businesswoman reported that her store’
s credit card rate jumped from 8% to 17%.
A Climate of Fear
The climate of fear and distrust in the banking industry has started to directly affect average Americans. One Pennsylvania car dealer stated that last year even those with a sketchy credit history were able to easily obtain financing but today even those with perfect credit are finding it difficult to get a loan. For those still able to obtain loans the interest rate is significantly higher. The fact that the US auto industry is in serious trouble and is seeking its own bailout makes the credit crunch even more troubling. Despite the dismal news coming from the US the dollar remains the currency of choice although many Forex traders have expressed concern about the future of the US dollar.
Difficulty Obtaining Credit
The difficulty of obtaining credit is sure to cause many consumers to put off the purchase of big ticket items such as appliances, and electronics spreading the crisis to the manufacturing sector with an accompanying loss of jobs. American consumers have suddenly become budget conscious, looking for ways to cut back and maintain a reasonable standard of living at the same time.
Unfortunately, even with the bailout, there is no guarantee of an economic turnaround. The Bush administration has openly stated that it will take “some time”
before the effects of the bailout are felt. Retailers are hoping sales during the traditional Christmas shopping season will be normal but given the limitations on credit the prognosis is not good.
Forex Traders and Markets Uneasy
The future of the US dollar is also uncertain, making stock and Forex markets uneasy. Many economists are predicting a grim future for the US dollar which adds to the uneasiness American consumers are feeling. The bailouts in the US and Europe may lead to inflation which further erodes consumer confidence. Forex traders are watching currency markets with great intensity. What happens in the next few months could well predict the economic future of the US.
Quick Forex Tip: The best way to be a successful forex trader is to keep up with current forex market news. Keeping up with market fluctuations and exchange rates will help you to successfully navigate potential forex opportunities. Once you learn about forex, you’ll want to start using your knowledge to engage in live currency trading - so you can turn your forex knowledge into profit.
