Consumer Spending Rises
Published by Bob Foster
I see where consumer spending rose more than forecasted last month. Apparently those who still have jobs, or income, believe the recession is over and it’s time to spend again. It is likely that much of this enthusiasm is based on the results of the stock market—which shows a near total recovery.
The stock market certainly could have been a good indicator 50 years ago—when 95% of public stock was owned by individual stockholders. Sadly, today about 75% of the stock in public companies is held by large institutional investors. These are the people who play the stock market like “high-rollers” play in Vegas…they don’t invest according to what is; they invest according to what they “feel” might happen.
On the other hand, maybe they know something we lay people don’t…but I doubt that is of much comfort to the 30 million unemployed and underemployed in the U.S.
Maybe I’ll believe the recession is over when they start putting the bulk of the unemployed back to work—at jobs other than flipping burgers or taking the Census.
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3 Responses to “Consumer Spending Rises”
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Bob – Considering where we have just emerged from where it looked like we were literally on the brink of total ruin, the slightest recovery is good news and it doesn’t matter really who is spending or even why. Americans were not spending nearly at all. It’s good that they’re spending now. I think I’ll purchase a new car myself.
I am with you on Wall Street and we really need to address this issue. (There are so many issues to address!) Regarding jobs, I find it a bit ironic that people often berate big government involvement in one breath and require it to create jobs in the other. (I am not insinuating this is what you’re doing in the very least.) I have not checked the percentage of the Stimulus that has gone out so far, but it looks like it is more than the confidence of the stock market. Here is an article worth reading in the WSJ, “Evidence Mounts of Strong Recover.” Perhaps the decisive measures taken by President Bush and President Obama are working, although they were bitter pills to swallow. I also still think that our government did not best work for us in putting stipulations on how the money could be spent and for what purpose. American, for example, are still losing their homes. Although, I read recently that banks are negotiating with homeowners more now. I worry about real financial reform or we will be right back here again. Economists on the right and left always say that jobs are the last to recover.
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Here is the WSJ article: http://online.wsj.com/article/SB20001424052702304798204575183683432202678.html?mod=wsj_share_facebook
Judith Ellis´s last blog ..Being a Tea Party Leader
Judith – Thanks for your comments. I read the WSJ article, and it paints a pretty optimistic picture. I guess it all depends on a person’s point of view. A WSJ journalist will likely have a much different view of things, than a former mid-level manager who is now out gathering census forms.
I also doubt that the 6.9 million people who are now delinquent on their home mortgages are feeling very optimistic—especially with only 231,000 loan modifications having been made, and the banks saying they do not want to make many more (4/13 committee hearings).
Technically, the recession is over when the economic drop “bottoms out” and stops dropping any further—so maybe the economic receding is over. However, I can’t see a very sharp recovery until the damage from the recession is addressed…mainly housing and unemployment.
You’re right about jobs being the last to recover—but they are also usually the first to lead the recovery…the primer. It just takes a very long time to get all those unemployed people back to work again, and large corporations are the very last to get back to full employment.
I also share your worry about real financial reform to keep us from falling right back down again. Wall Street (and their ilk) is far too greedy to fit into a normal capitalistic society, and unfortunately, that means they need to be controlled by government regulation.
As a side interest…let me know what kind of car you purchase. As an old GM car guy, I am always interested in what kind of car people drive, and why.
Thanks again for the comments.