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Over half of consumers in the U.S. hold a negative position on the economy as they continue to see a decrease in household assets and an increase in personal debt

The latest information from two of TNS’ banking research studies show consumer perceptions of the U.S. economy remain predominantly negative. According to the studies, consumer perception of the economy is virtually unchanged since September, with 64% holding a negative position. But while consumer perception remains low, business executives, with revenues between $3MM and $2B, are slightly more optimistic.
After feeling slightly more positive about the near term prospects for the economy in September, consumers’ outlook shifted in a more negative direction in December. According to the study, a vast majority of consumers (66%) strongly anticipate that they will be cutting their personal spending over the next six months. “Consumers have become anxious about the high rate of unemployment, rising interest rates, the possibility of price inflation, more foreclosures, and flat or even wage deflation,” said Glenn Staada, Vice President of TNS, “We’re seeing that consumers are more often negative, not positive, about their personal situation and components of the economy in the coming months.”
While executives are more likely than consumers to say the economy will improve in coming months, the credit situation has nearly all still in cost cutting mode. 95% of businesses will continue to aggressively seek ways to cut costs in the next six months, with 52% saying this includes labor costs.
Despite their optimism, executives are resigned to the opinion that the unemployment picture in the U.S. will get worse before it gets better.
The Credit Crunch and Small Business
Amid the widespread crisis of this past year, even healthy small businesses felt the squeeze and some are still feeling it. The demand for fresh credit is great, yet the current credit shortage continues to exacerbate cash shortfalls for businesses, causing nearly all to remain in cost cutting mode well into 2010. Thirty-four percent (34%) of small businesses are anticipating that they will have trouble accessing the credit they need. “With credit not flowing, businesses continue to struggle with a diminished cash position and have concerns about their ability to acquire the credit necessary to bridge the gap,” Staada added. “With consumers and businesses hunkering down, sensitivity to rates, fees, and other pricing issues will remain a top issue for bankers in 2010.”
The impact of the credit crisis proves to be a significant pull on job creation during the economic recovery. This was reinforced last Friday when the U.S. government reported that U.S. employers unexpectedly cut 85,000 jobs in December, cooling optimism on the labor market’s recovery. Furthermore there doesn’t appear to be an end to labor cuts, especially among smaller businesses.

SOURCE TNS