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CNN Saturday Morning News

How Worried Are Consumers?

Aired July 27, 2002 - 07:19   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: The recent spiral on Wall Street has given investors a bad case of jitters, and it's being felt from Main Street to Pennsylvania Avenue. Just how worried are consumers out there?

CNN's Kathleen Hays takes a look.

(BEGIN VIDEOTAPE)

KATHLEEN HAYS, CNN FINANCIAL NEWS (voice-over): Consumer sentiment tumbled in July as people grew more worried about the economy's future, but not as much as had been reported at the middle of the month.

The University of Michigan's consumer sentiment index fell more than 4 points in July, hitting its lowest level since November. But the final number of 88.1 was up from a reading of 86.5 reported at mid-month, suggesting the tumbling stock market has not damaged the consumer's psyche as much as previously feared.

MARK VITNER, WACHOVIA SECURITIES: Most consumers don't have the exposure in the stock market that people think they do. Fewer than 10 percent of American households have significant holdings of stock such that this sell-off would have really mattered to their ongoing income.

HAYS: And there are signs that consumers are still spending even as the value of their 401(K) accounts dwindles. Weekly chain store sales have managed to trend higher, and auto sales are reported to be running at healthy levels this month, boosted by incentive financing deals.

And many say the strong housing market and rising home prices continue to be at least a partial offset to the drop in stocks and the loss of wealth it has caused.

DAVID LEREAH, NATIONAL ASSOCIATION OF REALTORS: I really do think there's a certain percentage of households out there that have lost money in the stock market. They're looking for a safe haven for their funds. Real estate represents that to them.

HAYS (on camera): A report this week showed that sales of existing homes cooled off a bit in June. Now economists are worried this could be a sign consumer confidence has started to ebb, hurt by the falling stock market. Kathleen Hays, CNN Financial News, New York.

(END VIDEOTAPE)

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