US Economy Dying Because Americans Stop Buying Shit They Don’t Need
Submitted by YOUR NEW REALITY
There’s something demented about the idea that the American economy can only remain strong, and keep growing, if mostly poor Americans can get easy credit to buy cheap crap from China.
Who designed this system? Daffy Duck?
We all know there has to be a better way, but what is it?
From the Washington Post :
For the past two decades, the nation could count on one thing to keep it going when economic times got tough: Consumers kept spending.
Not anymore.
Real spending has been flat or down since June. The cutbacks have been so severe that many economists are predicting that the third quarter will show the first quarterly decline in consumer spending in 17 years — effectively stalling the engine of the American economy.
Spending fuels about 70 percent of the nation’s gross domestic product, and right now, consumers’ pain is being felt across socioeconomic lines in ways both big and small.
Unlike in previous years, consumers are grappling with significant inflation, particularly for necessities such as food and fuel, that are eating at their purchasing power. The consumer price index rose 4.3 percent during the second quarter of this year compared with the same period last year, the largest increase since the early 1990s. Meanwhile, real wages are decreasing and the unemployment rate has been rising since the summer to 6.1 percent in August, a five-year high.
The stats in the rapid falloff of American spending are absolutely stunning. The worse the news of the financial crisis, the quicker Americans stop spending, which, according to the New York Times virtually guarantees “the economic situation will get worse before it gets better” :
Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.
When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades. Many economists, who began the third quarter expecting modest growth, now believe the cutbacks are so severe that the overall economy did not expand either, and they warn that a consumer-led recession could be more severe than the relatively mild one earlier this decade.
“The last few days have devastated the American consumer,” said Walter Loeb, president of Loeb Associates, a consultancy, who said he worried that the constant drumbeat of negative news about the economy was becoming a self-fulfilling prophecy. “They all feel poor.”
Consumer spending, which accounts for nearly two-thirds of the economy, grew modestly earlier in the year but fell in July and August on an annualized rate. When the government releases quarterly numbers this month, they are expected to show that consumer spending shrank 3 percent or more. That would be the first quarterly decline since 1990, ahead of the 1991 recession, and the steepest since 1981.
….household net worth, which greases spending, fell $6 trillion over the last year, with $1 trillion of that in just the last four weeks…
How long will it be before the non-spenders start getting blamed for the continuance of the US economic crisis? By the tone of some of the stories popping up in the mainstream media, it’s already begun.
I’d expect there will be a concerted mainstream media effort to make Americans feel guilty about blowing their dwindling supply of cash on things like food and rent, instead of a $2000 television. What else are they going to do? Praise poor Americans for taking better care of their cash while advertising revenue for the mainstream media plummets?
By the way, how’s your food garden going? It’s never too late to get planting, inside and out.
There’s a great story here on the rise of ‘free veggie gardens’ popping up by the sides of roads in inner suburban Sydney. This needs to happen in every village, town and city in Australia, and across America. It sucks being poor, it’s absolutely shithouse owing a lot of money you can’t pay back, but it’s a lot easier to deal with all that when you’re eating fresh, good quality meals. Particularly ones that cost next to nothing, outside of basic gardening skills and a little time.
