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naked capitalism: Consumers Tightening Belts, Raising Worries About Recovery
From the Wall Street Journal:
Major retailers reported that American consumers are continuing to hunker down, casting a cloud over the durability of the U.S. recovery and underscoring the importance of overseas demand in restoring the world economy to health.
...
American consumers appear so shaken by the worst recession since the Great Depression -- and so pinched by unemployment, stagnant wages and stingier lenders -- that they are reining in spending on all but basics. Economists also see an upturn in U.S. household saving as the beginning of a prolonged period of thrift.....
...
Earlier this week, the Federal Reserve said a July survey of banks found continued tightening of lending standards as well as a diminished appetite for borrowing among consumers. About a third of banks said they tightened lending standards on credit cards and other consumer loans since April. No banks reported relaxing them.


"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 19th, 2009 at 05:42:21 PM EST
A week ago I made a comment derived from reading the Zero Hedge article you cite in which I questioned the vigor and sustainability of the reported recovery in France and Germany.  Given the role that the US consumer has played for the last decade+ in maintaining growth in the global economy I had doubts as to the US consumer continuing to play that role and concerns about the impact that would have on the global economy.  I was not trying to say that Europe was doomed or to gloat that you were in the same boat as the USA, although that may have been how my comment was perceived.

I think it has been a disaster for the US economy and society to allow the US to become the consumer of last resort and to encourage US citizens to draw equity out of their homes to maintain consumption levels.  That only provided a temporary benefit to Wall Street, which is now gone, but the debt remains.  And far too much of our manufacturing remains in China and elsewhere.  Those who maintained that we could not survive as a nation of service providers and hamburger flippers are being proved right.

China has committed to increasing domestic spending, and, as they have vast social infrastructure needs this will help, as will similar spending in India.  But the total size of the domestic, as opposed to the export sides of those economies is small compared to the need.

These factors were all well described in a prescient article by Dr.  André Lara Resende, a well-known Brazilian economist, whose paper, After the Crisis: Macro Imbalance, Credibility and Reserve-Currency  William Buiter made the subject of his June 6 Mavercon blog.  It remains worth a read.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 19th, 2009 at 09:59:02 PM EST
[ Parent ]
to point out that the US was NOT the consumer of last resort - or only for some of the Asian mercantilist economies.

And my response on the sustainability of French and German recovery lies on recent statistics showing that personal incomes are still growing in France and Germany, thus sustaining consumption fairly naturally (withotu recourse to more debt).

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Aug 20th, 2009 at 03:53:20 PM EST
[ Parent ]
personal incomes are still growing in France and Germany, thus sustaining consumption fairly naturally (withotu recourse to more debt).
And I continue to be gratified by this fact and continue to hope that it will continue.  It is good that at least two western countries can keep their heads above water.  One of my concerns about the mismanagement of the US economy is that it might drag everyone down with it.


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Aug 20th, 2009 at 10:47:56 PM EST
[ Parent ]

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