Frantic Market Can Make For Jittery Consumers
The volatile stock market has people worried.
After the downgrade of Treasury Bonds by Standard & Poor's, consumers might be less likely to buy a home, car or other big ticket item if they believe the economy is going south.
But even as the market suffers through fits and falls, people are visiting car dealers. On a recent day, Jack Myers was trading in his gigantic, black 2002 Chevy pickup at a dealership in southeast Michigan.
"Well this [truck] is eating gas," Myers said, "and we [want] something more economical. We're purchasing a hybrid."
Even though the price of gas has been going down, Myers doesn't expect it to stay that way. He and his wife Nancy said they should have bought a new car in 2007or 2008, but that was when the economy was tanking.
Myers said they started the deal for the car back in May, so it is ready to pick up, despite what's happening in the markets right now. But Jack and Nancy Myers are paying close attention to the stock market, and the S&P downgrade.
"Now we're committed. We're going buy it today," he said. "But if we were going to come in today to buy a new car? We would probably wait a while to see what shakes out."
Back home, the Myers own another ten-year-old car, but that one is going to stay in the garage a little longer. At least until the economy settles down. Jack said he's looking for something used and with good gas mileage.
Dan Toshach, on the other hand, said he's not too concerned about what's going on in Washington or on the stock market. He brought his car that has more than 200,000 miles on it to a Honda dealership, and he's not letting the market limit his options.
"It's always a roller coaster," Toshach said. "I'm hoping that it turns around but, if it doesn't, as long as I can get a car payment that I can deal with then I [will] deal with it."
Cues From Wall Street
The S&P downgrade doesn't directly affect the interest rate on the loans these people would be taking out, but it does affect the overall car shopping vibe.
Jesse Toprak, an analyst with TrueCare.com, said one of the things that directly effect car sales and other spending is the Dow Jones Industrial Average. He said what consumers see on TV often determines whether they buy or not, or what they buy.
"When they flip these channels on and they see the stock market up or down — it's almost like a green arrow or red arrow for spending," Toprak said. He said whether you're an investor or not, people get their cues from Wall Street.
Joe Sesi owns the dealership where the Myers' were buying their car. He's tall, has white hair and is mild mannered; about as Main Street as Main Street gets.
"You know we've been through this process now [in] the Midwest. We've been in the epicenter of this economic tsunami now for three years and we've survived," Sesi said. "We'll survive this one too."
Despite his positivity, Sesi is actually very angry at the leadership in Washington.
"We had a recovery going and they just kind of squandered it again," he said.
But Sesi's anger doesn't mean he's lost hope. He still believes the economy will get better by this fall. His feelings about Washington, however, are another story. That, he said, is going to take a whole lot longer.