Cycle of fear damages U.S. economic growth
The fallout from Wall Street is sapping consumer confidence on Main Street. When consumers aren't feeling confident, they don't spend. CBS News correspondent Dean Reynolds reports that when consumers don't spend, businesses have no reason to hire more workers.
Joe Tedesco is president of a company that distributes boxes for everything from food to furniture. With 100 workers in two states, his company, Stamar Packaging, has had no layoffs in five years, but no serious hiring either.
"We're just hesitant to really, you know, to pull the trigger to bring on more employees without having any true confidence in what's going on in the market place," Tedesco says.
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That hesitation and lack of confidence are echoed by 88 percent of small business owners who think the economy will remain flat or decline into another recession. Around 36 percent are not confident in the future of even their own businesses, the National Business Association says.
With unemployment holding above 9 percent, there is little incentive to raise wages, and that means there's less money being spent out there. Another survey of retailers shows consumer spending has dropped for two straight weeks. Some people say their money is being spent faster.
The uncertainty is also freezing much of the all-important housing market, as prospective buyers and sellers wait to see if prices will stabilize or whether mortgage interest rates will change.
A leading economist told CBS News that the uncertainty and lack of confidence are rooted in fear, and fear is something you never want injected into the economy.
