30. August 2010 17:10
What’s different about this current economic downturn? Well for one thing, consumers seem a lot less confident than they were during the last economic slump in January 2004.
According to the latest National Pricing Indicator report compiled by Dr. Dan Geller of Market Rates Insight, consumers are exhibiting one-third less confidence in deposit rates during the current downturn – a difference of 36 index points compared to January 2004.
The Consumer Sentiment Index produced by the University of Michigan (MCSI) has a strong and significant relationship to the national average rate for deposits. At the previous record low in January 2004, the MCSI stood at 103.8. In July 2010, which reflected the new record low for deposit rates, the index dropped to 67.8 (see Figure 1). The national average rate for deposits stood at 1.88 in January 2004 compared to 0.99 in July (see Figure 2).