Americans Cut Back Sharply on Spending

[RamboLiberal]

Source: NY Times

Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.

The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.

There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.

A raft of consumer companies — high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney — reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.

American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.


Read more: http://www.nytimes.com/2008/01/14/business/14spend.html?hp

[ursi]

1. with credit cards maxed out and the inability to use their homes like ATMs

Americans are screwed.

[Digit]

2. I love how they spin this...making it the fault of consumers for not spending more

Like it is a choice whether to spend money or not, like deciding what clothes to wear the next day.

With the humongous increase in energy costs for gas and heating our homes, you have the increase in food costs across the board. Add to this the increases we have seen in health care costs, and people on the brink of losing their homes to foreclosure.

Many have already lost their jobs, or had their pay cut.

Oh yeah, we are a fickle bunch sitting on loads of money, but we just don't want to spend it out of spite.

[ClintonTyree]

4. And how they spin....

the notion that there "may be" a recession coming up. :wtf: I don't know what rock these jerks have been hiding under, but there's been a full blown recession under way for well over a year, possibly longer. They fudged the economic facts as long as they could, used all of the creative ways possible to hide our crappy economy and they STILL won't admit that GWB's "economic miracle" is, as everything else about his administration, an abject failure.

I guess those jackasses don't realize that we've been LIVING Bush's recession for the past few years, not just reading about it. :banghead:

[tanyev]

8. I predict we will be urged to go shopping in this year's SOTU Address.

[Lisa]

16. yes -- remember "Don't buy gas if you don't need it"?

This was at a time when gas prices were high, and Bush was implying that Americans were aimlessly frittering away their cash, buying it on a whim.



Americans should be prudent in their use of energy during the course of the next few weeks. Don't buy gas if you don't need it.
Washington, D.C., Sep. 1, 2005

[depakid]

18. The Times is just as big a whore as anyone in the MSM when it's advertising revenues

are likely to be threatened....

[Voltaire99]

3. Stay in the race, Edwards. Populism's going to be popular again.

Give the economy another half year, and a panicked, broke nation is going to demand economic justice.

That's the point at which it won't help to be a corporate stooge running for president.

[sendero]

5. Exactly..

.... I hope Edwards can hold on for a while, because time is most definitely on his side!

[NikolaC]

6. Nice of Them To Blame the Victims

of this horror show. My husband and I are looking to move back to Virginia. The town where I used to live (which is a feeder city to DC) has a ton of homes for sale below their fair value, or foreclosures. We have already made it clear to our realtor that we WILL NOT profit off of the misery of someone who is in foreclosure, nor will we purchase a home that is bank owned (sadly, there are many of them). Only three years ago I sold my home in that town for over twice it's value due to a bidding war that had ensued, now I am saddened by what has happened to so many who have been caught up in the sub-prime scam.

Those corporate scum have caused untold harm through their greed and machinations for so long, with a lot of help. IF there was regulation of the banking, insurance (a single payer system is my preference though), oil and telecom industries I believe we would not be in such dire straights. By being allowed to ship jobs elsewhere, jack up the cost of oil and gas, have outrageous insurance fees with little to no return, have interest rates and fees that are arbitrary and through the roof, making legislation that punishes the average American consumer, corporations have been allowed to get away with murder. Yet few in our government are willing to take them to task for it, much less legislate to protect their constituents from these things happening. On the contrary, we have the likes of the bankruptcy bill to thank them for.

You have parents working two and three jobs and struggling to make ends meet and teenagers working to help out or support themselves instead of concentrating on school (which is another mess). This is no way for human beings to live, constantly in debt sick and afraid to seek medical attention, living on a fixed income, ALL BECAUSE OF GREED. My husband and I often wonder, with their greed, power madness and manipulations being so out of control, what are they going to do when they have no one left to gouge? Sit on their fat profits to do what with when most of us are dead broke, or just dead? A morbid thought, but one that we have brought up due to the fact that they are running roughshod over everyone with no stopping. There needs to be a change in leadership on the state and federal level, as well as a lot of new legislation. America needs change in a big way that is going to take a long time to enact. I only hope that it is not too late and that more wake up out of the ether soon. The US CANNOT AFFORD to be in the position it is in anymore. Thanks for the thread.

Oh, BTW, when we were shopping at the last minute during the 23rd to the 24th of Dec, Pentagon City Mall and Springfield Mall were madhouses. I was sure though that this did not reflect the rest of the country and was not surprised when the final numbers for that shopping "season" came out. Not sorry to see that the corps took a bit of a financial hit this year.

[yardwork]

10. Welcome to DU. Thank you for your thoughtful and inciteful post.

I agree with you.

[Doctor_J]

15. Welcome, Nikola

Spectacular 33rd post. We too sold a McMansion 18 months ago for a stupid amount of money, and are now living modestly riding out the recession. We too do not want to pick the bones of some hardworking people who didn't have the good luck to get out before the bottom fell out.

Keep the faith. Soon the media whores will get their just desserts, and then we will begin to take the country back.

:thumbsup:

[bluerum]

7. They ARE spending. On higher fuel and food prices. Putting $$$'s right

into the Bush and Cheney clan pockets. Not like we have much of choice.

This is the repiglican way. Grab them by the throat and pick their pockets. Exhaust all resources and pillage until there is nothing left.

[lunatica]

9. Now that the high end stores are wailing

They're paying attention. If the filthy rich are cutting back on their luxury spending then the sky must be falling! What other explanation could there possibly be, or, for that matter, what other indication could possibly be important enough for them to notice that there's a problem?

:sarcasm:

[Billy Burnett]

11. Slowdown in GROWTH.

Note the last sentence in the OP. "American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent ...

Stockholders will see a few percentage points less in (lower taxed) dividend derived income. Poor babies. Time to lay off more workers (who pay maximum tax rates) so the stockholders won't bail and move their money to Halliburton, KBR, Mobil, Shell, etc.

[AwakeAtLast]

14. That's what jumped out at me, too.

I always think to myself, "How can it grow FOREVER?"

I can't believe that if their predicted numbers don't pan out, they go into a tailspin even if there is some marginal growth!

[AngryOldDem]

12. Can't spend what you don't have

And I don't think you really need a PhD from the London School of Economics to figure that out.

[OhioChick]

13. K&R

:kick:

[Arugula Latte]

17. Well, imagine that. Stagnant wages makes people cut back their spending.

No one could have predicted that! :o

[Tight_rope]

19. I love DU...you guys always take the words

right outta my mouth. We think too much alike.