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Spend, spend, spend
By Daphne | February 14, 2008
Federal Reserve Chairman Ben S. Bernanke isn’t giving us any hope for a fatter wallet anytime soon.
“The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term,” Bernanke said.
Tell us something we don’t already know… the economy isn’t going to improve in the next couple of months. We already know that. What else can we do?
The financial stimulus plan was passed. This may not mean that this is enough to make this into a moderate recession. The president wants us to spend to get things jumping again.
Another interest rate cut isn’t going to help someone who is already in debt. This will only help those with good credit and have a history of paying on time.
It’s hard to imagine an economy that does not take into consideration the consumer but to have 2/3 of the GDP from consumer expenditures spells bad news in general, not only during a recession. People have pulled back. I notice this when I go different places or even go looking in a store. There are so many people just standing around in some stores who have nothing to do.
Our economy is relying on the consumer to start spending again and not using some financial fortitude and only pay for what he/she can afford. Shocking but true. You will live if you don’t have those extra things, which are just things. The only segments of our economy that showed any growth, though minimal were for food and gasoline. This was also due in part to the increase in prices. Inflation should not be the way to make the economy grow.
Basically, the economy will grow when people who get out of debt, forget what it was like to be heavily in debt with revolving credit (credit cards) and start spending again. Some business may close or pare down their hiring, spending and production which will be a problem not only in the U.S. but also globally. If we as consumers keep the reins on our spending, it will take longer for our consumer driven economy to recover.
Spend, spend, spend is the current economic plan and it’s not working. We need to change that to “save, invest and spend.” The spending part is conditional: spend - if we can afford it or do more saving and investing until we can and then we can.
Topics: February 2008 |