Consumer confidence is markedly down across Europe and the United States in the opening weeks of the 2007 Holiday season and it doesn't look to improve in the next few weeks. The International Herald Tribune reported today that: "fewer Americans say they are planning major purchases than at any time in recent years, and that the proportion expecting the economy to create more jobs is at its lowest level since 1974." Additionally, two weeks ago the US Fed announced that they expected the US economy to continue to sputter in 2008.Europeans are also being tighter this Holiday season, with the most optimistic predictions only projecting a 2% growth over the same period last year. The concerns in Europe are centered around growing inflation; the ECB announced on November 30 that the Euro-zone was averaging 3% yearly inflation, a full percentage point about the ECB's mark of 2%. While the inflation may not be too high, there are concerns with the US Fed expected to cut rates later this week that credit would become increasingly difficult to obtain - though the ECB did extend its lending period to help dampen such fears.
Europeans are generally more adverse to rising inflation rates than Americans, much of this phenomenon due to historical experiences with hyper-inflation. This is especially true in Germany, where Hans Wolfgang Brachinger, a statistics professor at the University of Freiburg in Germany, has recalculated the German inflation rate, which in November was at an 11-year high of 3.3%, to reflect what the German consumer perceives the inflation rate to be and found that "Germans sensed an annual inflation rate of 7.5 percent in October - more than twice the actual level."
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