Payday loans are up; prices are down

As more people are taking out payday loans just to cover the basics, consumer prices have fallen at record rates for yet another  month, the Washington Post reports. Housing starts have hit a 50-year low.

In yet another sign of the weakening economy, the Federal Reserve is expected to cut interest rates today.

Market breakdown

The country’s economic woes are driving prices down, but it seems they are still not low enough. With unemployment skyrocketing and home equity plummeting, consumers are hanging on to their cash.

And when consumers quit spending, retailers lose big time. Best Buy, the giant retailer that carries all things electronic, reported sales are down 77 percent from this time last year. This comes as a shock, with Christmas-wish-list makers of all demographics clamoring for gadgets. Even with the help of payday loans, people just can’t afford as many gifts as they did last year.

What lies ahead?

The Fed’s announcement that it will cut interest rates cause the stock market to pick up a bit. But at least one man believes the economic crisis may have caused permanent damage. Best Buy chief executive Brad Anderson said it has caused a  “dramatic and potentially long-lasting change in consumer behavior,” the Associated Press reported.

More giants take big-time losses

It’s easy to see the domino effect. As businesses slash budgets, lay off employees and downsize, the businesses they do business with take a hit. Office Depot, possibly the country’s leading supplier of office products, took a major hit today as Standard & Poor downgraded its corporate credit rating.

Last week Office Depot said it will close 112 stores in the next three months. Next year, 14 more will shut down when their leases expire. The store’s plan to open 40 new stores next year has been cut in half.

Just the basics

Spending on electronics and office supplies have taken a huge hit. It seems consumers have been reduced to spending money only on absolute necessities. Thanks goodness payday loans are there to help when you run out of the esssentials, and they usually cost  less than bounced checks and overdraft charges.