When confused and in doubt, consumers tend to default to their instinctive reaction to reduce spending and put more money aside for a rainy day. This is a normal reaction to economic and financial uncertainty rooted in our mechanism for self preservation.
If confusion and uncertainty about the domestic and global economy persist, consumers are likely to lower spending, which will result in an economic slowdown in the U.S. because consumer consumption makes up about 70 percent of Gross National Product of the U.S.
About The Money Anxiety Index
The Money Anxiety Index is an early-warning system to shifts in the economy. The index is highly predictive. It predicted the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.
The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings levels. Historically, the Money Anxiety Index fluctuated from a high of 135.3 during the recession of the early 1980s, to a low of 38.7 in the mid 1960s.