Posted on 10/16/2007 6:33:32 AM PDT by Hydroshock
Fortune Magazine) -- Here I go. I am about to walk into one of the biggest sucker's games in the whole world of economics: declaring that the U.S. consumer is tapped out, so desperately in hock and troubled about the future that he finally just can't spend like it's 1999 anymore. And to be clear, that is what I'm declaring. Unless I can talk myself out of it by the end of the column.
I must be nuts. One of the most reliable ways to look like a business dope over the past several years has been to announce that the consumer spending party is finally over. Every year, usually in the fourth quarter, assorted boffins prove beyond doubt that U.S. consumers cannot possibly keep spending as they have been. Consumers then ignore those reports and keep right on spending anyway.
The question of consumer behavior is enormously important because more than 70% of U.S. economic activity is consumer spending. Most companies thus depend on our buying, which means that most of the valuation of the U.S. stock market depends on it also.
And because we buy so many imports - almost $2 trillion worth last year - plenty of foreign economies depend on us as well. So it's easy to see why everybody wonders what U.S. consumers will do next.
(Excerpt) Read more at money.cnn.com ...
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After a binge comes the hangover................
My BS meter just shot up.
It’s only true if those bastards in the Democratic Congress don’t renew the tax cuts...
When I compare my expenditures to those of other American consumers, I’m pretty representative. Have always been able to pick rising stocks successfully because I know that if I like a product or business, other consumers will too. Anyway: I’m still spending, and so are my neighbors. Big delivery trucks from Best Buys and major appliance stores come up the streets of our neighborhood. Remodelling and other big-ticket expenses continue. Everybody seems to be driving a new car or truck. Most important measure: it’s hard to find a parking place at the mall. It doesn’t smell or feel like the onset of a recession. I’m not worried (yet). That will disappoint you, of course.
Having said that, I suspect there is a lot of truth to what the author says in this article. In fact, I have long believed that the real motive behind the illegal alien amnesty proposal in Congress was not the desire to get more cheap labor into this country . . . it was the need to get more consumers into this country.
Oh well, who are the globalists and “free traders” going to stick next to keep ‘globalisation’ going?
I’ve spent more than 40K on remodeling this year...Best Buy and Lowe’s are always packed.
In fact it started Sunday spending $1K on some 'stuff'. No scratch that, three weeks ago I bought another Fender guitar and a new Fender G-DEC amplifier. So it started then I guess.
And what defines a 'spending binge' anyway?
To The Police: Stop Me Before I Buy More Guitars!
/s
Noone can be disapponted because people are not worried. It’s not judgement day or anything it’s just a recession that follows an economic firework.
With no money in their pockets - what is it people can buy ?
The answer for the last years was - sell the worth of your home in the future and get a car on credit.
Since interests where so low that worked great for a while but it was clear that it doesn’t for ever.
Normaly low taxes are ment to be an instrument for stimulating an economy by enabeling investments that otherwise would be found to risky.
In the last years this instrument was used to get people on cruising holydays in the caribean sea. The money shelled out is not working in a factory waiting to pay back the printer - it’s burned and gone.
Now comes the time to rise interests to not loose the ability to pay for imported commodities.
Get back to work.
And more people paying into Social Security?
Carolyn
LOL! That's the story of my life, too... ;)
That’s only a small part of it. If there’s any chance in hell that the guy wading across the Rio Grande today will be shopping in a car dealership a couple of years from now, this country wants to make it as easy as possible for him to get here.
Do you and your friends buy all that crap on credit?
Like a broken clock which must be correct twice each day, the “pundit”s”once again claim the consumer is tapped out and the sky will shortly fall.
And when it happens and America slides into a recession, let’s see their take when oil prices drop below $50.00bbl because the economic engine that pulls the entire worlds economic train has ceased to run. Will they be happy?
It’s(the economy) being artificially pumped up as far as I’m concerned, and it can’t last forever.
Agreed.
If domestic and foreign events proceed apace we will see this Congress out on its ass next year as voters vote for newcomers.
Heavens, no. Didn't buy my Thoroughbred hunter on credit, either. Or my daughter's private college education, or her horse-show fees, or the new dishwasher, refrigerator, and kitchen cabinets. I like to pay cash for things, taking longer to save up for them in advance. Right now I'm saving up to have the basement finished.
Fairview-Doing ok on the stock market too, I’ll bet. Right? Yeah-anyone who is thinks things are perfectly rosy. The rest of the country that can’t afford to play the stock market ain’t quite so lucky.
I love your tagline!
You are in Germany.....I'm here in the US....I know NO ONE who went on a Caribbean Cruise by mortgaging their house.....
Play the stock market? Any average Joe can start with $50 a month in a mutual fund or d.r.i.p. and let it start compounding.
Thank you; I think it’s true, but I can’t claim credit for it. Some other Freeper originated it.
Some of it’s luck, Ghost, but there are other factors too. I work more than a forty-hour week. Mr. Fairview and I both work at a regular job and have outside money-raising activities on evenings and weekends. But believe me, there have been plenty of setbacks, sorrows, catastrophic health problems, and disasters in our lives.
I do not play the stock market—wouldn’t know how. I do save money assiduously and pinch pennies until they squeak so that I can put something aside. I deny myself some things I want, so that I can have other things.
There never has and never will be a time in this country or any other when there are no problems and everyone will prosper; we were not promised that. I’m very aware that we could lose it all tomorrow, which has happened to us before. Life is uncertain, and seldom fair.
There. Fixed it.
BUMP
Now that we are retired, I tell my wife, "You can have anything you want. You just can't have EVERYTHING you want."
$25.00 a week starting at age 18 invested in a mutual fund returning 9% for 50 years.
$1,154,973.40 for retirement.
Colvin wrote this on Apr. 15th 2005:
“The overwhelming impression is that we’re a society living way beyond our means and seemingly helpless to save ourselves. The inescapable big question is whether we’re headed for some kind of crisis or maybe just a gradual descent into misery — or whether all the handwringing is merely the latest installment in a long tradition of fretting over American acquisitiveness, which has never proven justified.
I’m afraid I tend toward the gloomy view, though deeply mindful of that view’s incredibly poor record. The twin deficits (trade and budget) were a favorite worry of the late 1980s; they were followed by a particularly mild recession and then the longest economic expansion in history. In the early 1980s personal debt was going to be our downfall, yet somehow it wasn’t.
More broadly, our rejection of the Protestant ethic of delayed gratification has been apparent since the rise of mass consumption in the 1920s. Harvard sociologist (and former FORTUNE writer) Daniel Bell made the case acutely in The Cultural Contradictions of Capitalism, published in 1976. His argument was irrefutable — the hard requirements of economic life are at war with the live-for-the-moment ethos of the culture — yet America has kept right on growing, our living standard rising, our life expectancy increasing, and we’ve remained the envy of the world.
In short, if profligacy is a disease, then we’ve managed it mighty well, and why should we believe that after all this time it’s finally going to hurt us? For at least a couple of reasons. One, the cultural trend has been running in one direction for a long time now, toward greater glorification of spending and acceptance of borrowing. Saving may be a virtue, but it’s just not cool. After years of decline, our savings rate is down around 1% of income, the world’s lowest. That marks a genuine difference with the past, and it’s cumulative: The longer it goes on, the harder to escape it becomes.
Two, the aging of the baby-boomers creates unique financial stresses. America’s most pampered and self-obsessed generation hasn’t prepared itself for retirement and, as usual, expects someone else to bail it out. Trouble is, succeeding generations aren’t big enough or rich enough to handle the job. That’s a new conflict.
None of that means the dollar must tank or interest rates explode, as some fear. The unwinding could be far more gradual. The result, years from now, could be Americans paying unimagined portions of their income to cover their parents’ and their own debts (personal and national) and to pay interest and dividends to the foreigners who financed our long shopping spree. That experience could even be as traumatic as the Depression was for an earlier generation and lead, as it did then, to a generation of champion savers and investors.
That is, America could come out stronger — eventually. I believe it always does. The question is how much pain we’ll need to turn us around. Right now it’s looking like a lot.”
Sounds like he’s still blowing the same old horn.
Well, that's certainly the long, historical view. We can surely rely on that.
Well, I retired early, so I don’t really give a $hit, as I have no control over things, other than myself. I manage ok and pay very few taxes any more. ;^D
so you missed the party ;-)
You are partially correct though - I got a stronger feeling for what’s happening over here then what happens on your side of the pond.
But this is 2007 - I got 5 friends that visit the US 3 to 4 times a year for business reasons and they got a lot of privat contacts over at your side - I am not here for nothing and I got some direct contacts myself - so I didn’t miss the part where everyone talked about the new rich middle class - asling further nobody of them had any savings. It was and is the normal status for nearly everyone to have more debts then liquidity.
WHERE? In Germany? or in the USA? If YOU think that is true in the USA - that "NEARLY EVERYONE HAS MORE DEBTS THAN LIQUIDITY" then I believe you must be watching CNN...right?
I just read the offical stats
And.....?
Well atleast he admits he's walking into the biggest suker game....
and ... what ?
Or you could enroll at the community college and borrow $40,000.
then buy $40,000 worth of Chinese "merchandise", then declare bankruptcy.
Just an idea.
lol - yeah. Money is where is look for it.
There’s spoilsports who say they wouldn’t be even going to the trough anymore once brown matter hits the fan.
That’s why bernanke said this helicopter thing...
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