It feels like we are waiting for the other shoe(s) to drop in equity markets. I think “shoe” is a plural, as the unweaving still has not filtered down into the consumer’s pocket as far as it should. The wealth affects consumer spending based on housing prices is making its psychological move through the markets very slowly.
Foreclosure data is still the dominant language used to assess the housing decline, and write downs are it for the banking and credit decline, but we have not started hearing much about bankruptcy.
Bob Lawless gives us this:
This just in. Bankruptcy filings in the U.S. are now at their highest daily rate since the 2005 changes to the federal bankruptcy law. According to Automated Access to Court Electronic Records (AACER), there were 79,198 bankruptcy filings in February 2008. Spread over the twenty business days in February, that is 3,959 filings per day. That’s a 28% increase over the same time period one year before and an 18% increase over January 2008. Is this a big deal? Yes and no.
Consumer spending is a tough one. We love our stuff and we are often overall optimistic, so we keep spending. What happens when a rocky economics system, a rocky banking system, and a rocky consumer collide?