Phoenix, AZ – New projections show spending is going to continue to decline the rest of this year and into the next. In fact, it won't return to pre-2007 levels until at least 2013. Economist Elliott Pollack said that's because people feel poorer because they're in debt, have little savings, and their retirement accounts and home values have shrunk.
"You'll live without a big-screen TV, you'll live with that car for another couple of years, you're not going to buy furniture, especially since nobody's moving. And it will also get into services," said Pollack.
University of Arizona economist Marshall Vest agreed people will spend less as long as they lack confidence in the economy. He said a survey of business owners shows what he calls a fear factor.
"We didn't ask them the reasons for the fear. I'm inferring the fear from the numbers they're telling us. The fear more than likely comes from watching too much TV. If we would just turn off the TV here for awhile, we'd be a lot better," said Vest.
The predictions come as Sen. Russell Pearce told colleagues that waiting to plug the current $1.6 billion deficit comes at a cost because state agencies continue to spend. He said if there's no plan to reduce spending by the end of this month, that will take $160 million of possible budget cuts off the table.