"Only dull people are brilliant at breakfast" -Oscar Wilde |
"The liberal soul shall be made fat, and he that watereth, shall be watered also himself." -- Proverbs 11:25 |
“This is not a fluke or a technical quirk. It’s fundamental. Real disposable income has been squeezed.” -- John E. Silvia, Washovia Chief Economist, Charlotte, NC.
With the overall economy growing at a mere 0.6 percent annual rate for the second quarter in a row, consumer spending advanced by only 1 percent, the government estimated. That was down sharply from the 2.9 percent gain for all of 2007 and the 3.1 percent gain for 2006. It was the weakest showing since 2001, the last time the economy was ensnared in a recession.
Even more ominously, Americans cut back on a wide variety of discretionary purchases, conserving their cash for necessary spending.
In the dip, economists saw evidence that the basic laws of arithmetic are now impinging on millions of households.
As real estate prices plunge, so does the ability of homeowners to borrow against the value of their homes, crimping a major artery of spending. As banks grow tighter with their dollars in a period of uncertainty, families are running up against credit limits, forcing many to live within their incomes. And as companies lay off employees and cut working hours, paychecks are effectively shrinking.
Labels: economic death watch, idiocy, mortgage crisis
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