Posted on 08/29/2009 7:11:15 PM PDT by BenLurkin
Household income in the United States is essentially stagnant, raising doubts about whether consumers already hurt by job losses can sustain an economic recovery.
The now-ended Cash for Clunkers program helped lift consumer spending last month and is expected to deliver a bigger boost in August. But any economic rebound likely would falter if shoppers lack the income to spend more in the long run.
Especially in the U.S., consumer spending is essential: It drives about 70 percent of economic activity — more than for most European nations and well above the rates in developing countries such as China.
U.S. retailers already are paying the price for flat income growth and weak consumer spending. A survey of big retail chains showed that shoppers remained tightfisted in July. That raised fears not just about back-to-school sales but also about the make-or-break holiday shopping season.
"Consumers just don't have the financial firepower to go out and spend more," said Mark Zandi, chief economist at Moody's Economy.com. "Unless businesses curtail their job cuts, the recovery could very well peter out."
Americans' purchasing power has been battered by the 6.7 million jobs that have vanished since the recession began in December 2007. Companies also have cut costs by forcing workers to take unpaid days off or to work only part time.
And some consumers have pared their spending because their pay hasn't kept pace with their expenses or because they're using more money to save or reduce debt. Personal incomes were unchanged in July, the Commerce Department said Friday. It was the eighth month out of the past 10 in which incomes have either fallen or failed to grow.
(Excerpt) Read more at news.yahoo.com ...
All of the increase in consumer spending since, oh, 1999 or so has been driven by an increase in consumer borrowing, not an increase in household income.
The arguments that the Bush economic recovery didn’t result in an increase in household wages were ignored by conservatives, to our peril. This was the canary in the coal mine, so to speak, that there was a coming debt bubble in the country. The negative rates of savings by late 2005 were the most ominous indicator, and were ignored by everyone in DC.
Ultimately, as it turns out, negative rates of savings are not sustainable.
Golly, who wouldathunkit?
Can't wait until the Cash for Clunkers people get a 1099 for $4500. Less democratic voters.
What if instead of Cash for Clunkers, the Bummer simply had issued tax rebates out of the $3B that Congress had allocated for it?
No ***t Sherlock. Could it be pay cut, no raise, tax increases. Just glad I have employment and I hope I still have the job this time next year. Who in the heck wants to spend money when doubts about the future are so prevalent.
They promised they wouldn’t, but that means nothing.
Largely driven by soaring home prices. Banks were falling over one another to offer the best second mortgage lines of credit.
Now would be a really great time to grant citizenship to 20 million poor people.
Bush legacy ping!
Wow, no one is getting richer.
The left must be very proud of themselves, they’ve killed economic growth. The kepitelest swine are suffering—perfect!
All hail our dear leader!
Yes, that is true.
But, as everyone learned (the hard way), those “prices” were ephemeral - ie, mere guesses as to value.
The single most important fact that bankers overlooked in this was that their easy lending standards were THE reason why home valuations were going up in the first place. As soon as the bankers got scared and started actually qualifying borrowers, home valuations were going to come down.
The funny thing is that they didn't even use all of it. If demand was anything like it was built up to be at the end, then they should have gone through all of it. As it was, they still hadn't used over $100,000,000 when it ended.
What I'm saying is that everyone who had plans of buying a new car in the near future may have bought one during CFC, so demand may be very low for the next few months if not years.
Try since 1989.
Someone ought to tell the idiots at Yahell that a temporary bump in vehicle sales means those are cars that WON’T be sold in September and beyond. And how much can the economy recover when incomes are flat, inflation is just around the corner, and nobody knows if they’ll have a job tomorrow.
“Household income in the United States is essentially stagnant, raising doubts about whether consumers already hurt by job losses can sustain an economic recovery.”
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What has never begun cannot be sustained! The talk of recovery is the babbling of desperate men. One who is drowning will grasp at a straw to try to stay above water. There IS NO RECOVERY AND THERE WILL NOT BE ONE ANY TIME SOON. Anyone who had any doubt about media bias need only look at the insane talk of recovery backed by nothing more real than frog’s hair and hen’s teeth and reflect on how the media would be presenting this if a Republican were in the White House. If John McCain occupied the oval office unemployment would have to go down to four per cent before the media would allow that there might be some hint of a recovery sometime in the future.
With 15% unemployment, it's a little more than just being "tightfisted"...
Now that a few more have realized just what Obama meant by change they are having second thoughts about letting government mismanage more of the economy by turning over their health care and higher energy taxes through Cap and Trade.
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