American consumers gloomy about future

March 25, 2008 7:42:33 PM PDT
There's a fresh indication that the economy is in trouble. American consumers haven't been this gloomy about the economy in 5 years. We've been hit hard in the Bay Area and local lawmakers are trying to chart a course.

No one seems to know if we've hit bottom yet, but more and more Bay Area residents are convinced the economy is in trouble -- and it could be a long time before it turns around.

A new ABC7 Listens poll lays it on the line. 77 percent say we're in a recession, even though almost no one in Washington will say that.

Our elected representatives in Washington are searching for solutions.

ABC7 News reporter David Louie: "Are we in a recession?"

Rep. Ellen Tauscher: "Yeah, I've thought so for probably the last four, five months. It takes about two months of numbers supposedly."

Democrat Ellen Tauscher represents the Bay Area district most affected by the economic downturn. Her region includes Antioch and Fairfield, both hard hit by foreclosures and the credit crisis.

Tauscher spoke Tuesday to a business group, the Contra Costa Council. We asked her what should be done for families losing their homes. She said she refers them to agencies working on the problem.

"HUD and other groups have people that you can talk to," says Tauscher.

But the economic slowdown goes far beyond that. Some people are reluctant to spend if their jobs are at risk. Others are cutting corners to pay for gas just to get to work.

That skittishness is affecting everybody and that's why it takes national leadership in Washington in the Executive Branch -- the President -- to stand up and be straight about how bad things are and what he's going to do," says Tauscher.

Republican presidential candidate, John McCain, took on the mortgage industry Tuesday, offering an idea to keep families in their homes.

"You may recall that immediately after September 11, 2001, General Motors stepped in to provide 0% financing as part of keeping the economy going. We need a similar response by the mortgage lenders," says McCain.

Tauscher spent 14 years on Wall Street. She was a vice president at Bear Stearns. She's calling for creation of an agency to keep an eye on investment banks.

"Because we didn't know how bad off these firms were -- and they in fact didn't know themselves -- that's a call for more oversight, scrutiny, and a regulatory network that's responsive to the 21st century," says Tauscher.

Tauscher is suggesting an agency similar to the Resolution Trust Corporation, which was created during the savings and loan crisis in the 90's. Resolution Trust sold off real estate and loans held by troubled thrifts. The perception persists, though, that government is more responsive to Wall Street than to Main Street.