On Mon, Sep 27, 2010 at 9:54 AM, Jerry Barnes <[email protected]> wrote: > > "The problem isn't particularly political. If consumer demand shot up do you > think that companies really wouldn't hire workers because they don't like > Obama?" > > Actually it is. People are not buying luxury items since they believe that > the current administration is driving the economy into the ground. They are > buying necessities, saving, and paying debt down.
And what evidence do you have for this? Consumer demand is down because of high unemployment. People who don't have jobs aren't spending money. Here's a graph of consumer spending and savings rates (year over year basis, so everything above 0 represents a positive over the previous year) http://online.wsj.com/article/SB10001424052748703369704575461293945190712.html At the moment, spending is outpacing income which has dropped saving rates but they are all fairly flat. As the WSJ notes, however, the biggest unknown is changes in the unemployment rate. When the unemployment rate goes down, consumer spending will go up. Now there is an open question of how much the recession has changed consumer behavior. It very well may be that the recession has finally instilled a sense of caution in consumers that the previous recession didn't and that consumers will carry lower debt loads and have higher savings rates than they did previously even once jobs start to come back. That is probably good for the long term health of the economy but will slow growth in the short term. It isn't entirely clear what will happen on that score yet. More takes on consumer spending/saving from the WSJ poll of economists: http://blogs.wsj.com/economics/2010/08/03/economists-react-cautious-consumers-save-more/ And from the NYT: http://www.nytimes.com/2010/08/04/business/economy/04savings.html Consumers are still highly leveraged. They are paying down that debt and increasing savings. That's a good thing for them individually though it does slow down overall economic growth. There is no indication that people are putting off major purchases in appreciable numbers due to concerns over the political policies of the White House however. Jud ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Order the Adobe Coldfusion Anthology now! http://www.amazon.com/Adobe-Coldfusion-Anthology-Michael-Dinowitz/dp/1430272155/?tag=houseoffusion Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:327982 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/groups/cf-community/unsubscribe.cfm
