High gas and food prices have been contributing to the slowdown on retail sales in recent months, but now consumers are dealing with the uncertainty of Wall Street. That lack of consumer confidence is affecting all types of retailers from discounters to high-end stores.
The turbulence on Wall Street is keeping the shops on Main Street pretty quiet these days. It seems just about everyone is holding back -- not necessarily because their paychecks have gotten smaller, but because of downright fear.
"Every day there's a bank failure, more government loans and intervention and it's really scary," said Mike Aponte, a Mill Valley resident.
"I wouldn't mind that flat screen TV, but it's one of those things, 'Could you get it?' Yeah, you could get it. Is it the smart thing to do right now? I just don't think so," says Kevin Hamilton, a Hayward resident.
According to preliminary figures from the International Council of Shopping Centers, September sales rose 1.7 percent, well below the 2.3 percent average growth since the beginning of the retail industry's fiscal year in February. What's more, luxury stores such as Neiman Marcus and Saks Fifth Avenue, suffered sharp drops, something consumer psychologist and professor Kit Yarrow, Ph.D. says is especially telling.
"It turns out that consumers are even less confident than we thought they were, because even the wealthy are pulling back on their spending. It's not because they don't have the funds, it's because they're afraid," said Yarrow, from Golden Gate University.
The weak reports do not bode well for the holiday shopping season and the overall economy; consumer spending accounts for two-thirds of all economic activity. House Speaker Nancy Pelosi is proposing another stimulus plan. Unlike the one this past spring that gave Americans rebate checks, Pelosi's $150 billion proposal would create jobs. She says she may call the house into session after the election to pass it. Peninsula Congresswoman Jackie Speier supports the idea.
"We do need more stimulus in that we have so many people out of work now. I mean 700,000 Americans out of work," said Representative Speier (D) of California.
However as important as it is to rev up the economy, many people ABC7's Lilian Kim talked to, question whether the government should spend billions on top of the $700 billion it plans to spend to bailout Wall Street.
"I don't think we can afford it right now, I think everyone needs to tighten their belts," said Karen Clopton, a San Francisco resident.
President Bush has expressed concerns about another stimulus package, but democrats predict the sentiment could change if the economy remains in trouble.