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Monday, October 03, 2011

From the "Figure that out all by yourself, Einstein?" file
Posted by Jill | 6:31 AM
You don't have to be a genius to realize this:
The U.S. economy is limping along with the help of modest business investment in new equipment, some exports to parts of the world that are growing and the last few dollars from the government's 2009 stimulus spending program.

For the time being, it looks like American consumers are AWOL. And until they come back, don't expect to see any real recovery in economic growth and the job market. Consumer spending typically accounts for roughly 70 percent of the U.S. economy.

Fresh data from the government Friday confirmed that American consumers are tapped out. Consumer spending in dollar terms rose 0.2 percent in August. But those extra dollars went to cover higher prices for food and gasoline; when adjusted for inflation, spending was flat.

Wages, meanwhile, slipped 0.1 percent -- the first decline in nearly two years. To make up the difference, American households had to dip into savings: the savings rate in August fell to its lowest level since late 2009.

"What you're basically getting is a scene where consumers are losing momentum, they're losing momentum on income and as a result of that they're slowing down on spending," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities in New York.
That spending slowdown has rippled through the economy, creating one of the biggest drags on an already weak recovery.

The part that the greedy didn't realize in their plans to take ALL of the wealth in this country, is that not even the most conspicuous consumers can keep an economy of this size going. They may be trying to push the middle class down into poverty and the poor into living on the streets, but if only 1% of the population has any money to spend, they're going to find that what they have isn't worth all that much.

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OpenID Kiterea said...
We don't have the money to spend. I work in retail, and yes, they have been cutting us as far down in hours as they can get away with. At this time last year I was starting to spend for the holidays, three years ago I would be able to spend a little extra on top of that. Now we are putting off bills in order to get enough food and gas to barely last. And nothing for the holidays it looks like from here. And I work for a VERY large company.

Anonymous Anonymous said...
I never did figure what genius (Alan Greenspan) thought that an economy which runs on consumer spending would do just fine with consumer wages remaining flat or shrinking over the last thirty years,and the middle class forced to go into "negative savings" just to support their lifestyles....

...And then the same genuises tell us the cure for our economic malaise is to....cut taxes for the richest 1%????

Blogger jurassicpork said...
It's essentially a Mexican standoff, which is an apt phrase considering NAFTA fucked us out of tens off millions of jobs:

The unemployed and underemployed are waiting to get hired before they'll start freely spending again and the corporations withholding these jobs or using scumbag temp agencies are still hoping for that "jobless recovery" to finally kick in.

Eventually, someone will have to blink. But I don't see any way of forcing people to boost spending without giving them paying jobs, so eventually Big Industry will have to blink. Blood, turnips and all that.