In the economy, money speaks louder than words

NEW YORK (AP) -- Nothing in the marketplace speaks like money, and the money consumers have been spending or not spending of late speaks in a loud, clear voice.

They have been spending more time in discount stores. They are buying less expensive, fuel-efficient cars. They are tending to spend at regional theme parks rather than traveling great distances.

In the stock market, they seem to be accepting the idea that their favorite tech stocks might not be coming back quickly and explosively, and so they are talking about buying "value" stocks or not buying at all.

In some geographical areas, they are less inclined to spend extravagant amounts for rents, especially in those places where the dot.com collapse has been significant, but also in urban areas such as Manhattan.

After several years of spending all their discretionary income, and borrowing more to keep on buying, they have begun putting money away for those less beneficent times that might challenge them someday.

These are some of the ways people are reacting to the changed economic scene, and their actions speak more meaningfully than those ubiquitous consumer confidence surveys about which so much is made. In the marketplace, dollars are real, but responses to questionnaires are words.

The Federal Reserve's August "Beige Book," a report from all 12 Fed districts so called for its cover color, indicates most retail sales were lower than a year ago when measured in comparable dollars.

Several districts reported a tourism decline. And earlier this year an Associated Press poll showed a third of Americans cutting vacation plans. Perhaps most shocking, the poll found the number of people expecting to take no vacation -- 15 percent -- had tripled in two years.

Rents have been weaker. The New York Fed found a big falloff in regional occupancy rates to the lowest in six years. In the past three months, it reports Manhattan rents falling at an annual rate of 10 percent.

From the Kansas City and St. Louis Federal Reserve banks comes word that consumers are switching from SUVs and light trucks to smaller cars, a trend the Financial Markets Center, a think tank that analyzes every Fed action and report, finds especially significant.

"Since foreign manufacturers dominate production of the latter (smaller) vehicles," it observes, "this trend threatens to lower profits and production levels for domestic carmakers." A doubly damaging trend.

How money is used equates to facts, not intentions. For the first time in more than three years, consumer credit shrank in June, falling $1.5 billion after having gained $6.8 billion in May.

Much of that borrowing decline was concentrated in car loans, but even the growth in credit-card loans, which had seemed to be on an inevitable upward slant, may have slowed. Revolving credit, which includes credit cards, did in fact rise in June by $2.3 billion, a 3.9 percent annual rate, compared with the May increase of $3.5 billion, a 6 percent annual rate.

Even more striking was the difference between June figures for the entire consumer credit category, versus expectations of economic and stock analysts of a gain, not a decline, of more than $7 billion.

The facts suggest that in the future, it might be wiser to watch what consumers do, since it is their money that's involved, rather than listen to analysts, who try to tell consumers what is expected of them.

Such as rescuing the economy.