What are we going to spend?

Repeatedly, I am seeing articles regarding the economy which refer to the spending of consumers being about 70 percent of the economy, and how the return of the consumer will bring back good economic times.  In other words, the economy is going to remain broken until everyone is spending more than they make, just like they used to.  What are we, the consumers going to spend?  Credit is no longer extended practically automatically if you have a Social Security number, and the credit limits have been cranked down to under 1,000 dollars for even top notch credit card holders.  Home equity loans have disappeared, the result of home values falling for months.  Income has not been keeping up with inflation for most people over the last te years or so, which means that people are actually making less than they were in the 1990’s.  So, what are we going to spend?

If the consumer does not resume his role as the driving force in the American economy, what is going to happen?  Well, first off, all the people who were making money managing the flow of goods from China to the U.S. are going to be hurting.  So are the people who made their money selling those Chinese goods to Americans.  As well as the people who transported those goods from the ships to the stores.  There will be fewer catalogs turning trees into wastepaper, fewer kiosks crowding shopping mall hall ways, and fewer truckload sales of everything from tools to ties.

Just maybe, we will begin to address the problems inherent in an economy that is dependent on people spending money instead of producing things of value.  Think of it!  The most important activity that Americans partake in is spending money!  If they don’t, empires will crash, the rich shall become destitute, and shopping malls will no longer be the American cathedrals.  So everyone is standing around on one foot waiting for consumers to get back out there and spend!  Spend!  Spend!

There are hardly any jobs that pay well anymore, because American business has taken their business out of America.  We are not supposed to research and develop, design, prototype, and build, we are supposed to BUY!  Buy with what money?

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One Response to “What are we going to spend?”

  1. essexbloke Says:

    A good question…a very good one indeed. I live in the UK which to all intents and purposes has been de-industrialised. Sure, there are a few foreign owned car plants and the like taking advantage of our supply of ‘flexible’ labour but this is a pale shadow of what we once had.

    The neo-liberal experiment in social and economic engineering that started here in the UK in the late 70s is reaching its grisly conslusion. In the 80’s the Thatcher government concluded that the UK could manage without industry and instead rely on high tech, financial services, various other services and last but by no means least, retail.

    Well, we all know what happened to high finance! As for the debt fuelled consumer boom, that is collapsing as rising unemployment and a wave of pay cuts deliver a harsh reality check to those who thought the dream lifestyle could be purchased on the plastic.

    As desperate UK retailers attempt to maintain profitability, they squeeze their supply chain. In turn the suppliers put the screws on their workers, imposing drastic pay cuts in a bid to remain competitive. As a result, the workers are forced to cut consumption or to trade down. So the pain for the retailers goes on and the whole cycle of cuts continues and triggers a self reinforcing downward spiral which will end…well, who knows where or how it will end! All I can say is that life will start to get very interesting…

    Like

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