As the price of necessities such as gasoline have continued to climb, the economic mood remains negative as illustrated most recently by the Conference Board’s Consumer Confidence Index, which declined yet again from 62.8 points in April to 57.2 points in May.  This was an overall decline of more than 47 percent from the 108.5 points reported in May of 2007.

Household budgets already stretched precariously thin during recent months, were met on Sunday with another milestone -- record breaking gasoline prices.  The American Automobile Association (AAA) announced that the average price of gasoline nationwide reached $4 a gallon for the first time in history.  Undoubtedly the soaring price of gas, which has risen 29 percent over the past year, has done its part in dampening consumer sentiment.  

This consumer pessimism is hard to argue with and signal consumers have remained challenged by the broader economic downturn.  Now with the average price of gasoline in the U.S. at $4.00 a gallon and spending on fuel accounting for more than 6 percent of wage income, the fear that has come front and center is the risk of declining consumer spending as confidence plummets.

Fears of slowed spending are understandable with the unemployment rate now standing at 5.5 percent and as 54 percent of consumers surveyed by the Discover Spending Monitor saying their personal finances are getting worse ("Discover U.S. Spending Monitor Rises 1.4 Points in May," June 4).  Most telling, 42 percent of respondents reported putting less into saving as a response to high fuel costs, while 48 percent of respondents planned to spend less on discretionary purchases, up five points over the last three months.

Tightened budgets and a heightened awareness of one’s financial burdens will inevitably produce a difficult recovery environment for collectors, but to what extent will the severity of this slowdown be felt in accounts receivable management and for how long, remain to be seen.