Consumer spending slows as stimulus fades

[Pale Blue Dot]

Source: MSNBC

WASHINGTON - Consumer spending in August turned in the weakest performance in six months, underscoring the threat the economy faces as the government's stimulus program fades into the past.

The Commerce Department reported Monday that consumer spending was unchanged in August, even worse than the small 0.2 percent gain economists had expected. It was the weakest showing since spending was also flat in February.

Personal incomes were up a better-than-expected 0.5 percent, a rebound after a 0.6 percent drop in July. After-tax incomes, which felt the impact of the stimulus program to a greater extent, dropped by 0.9 percent, however.

The data were released as the House prepared to vote on a $700 billion bailout of the financial system. The compromise packaged, hashed out in marathon meetings by lawmakers over the weekend, would be the largest financial system rescue since the Great Depression. It is aimed at buying up soured mortgage-related assets from banks in the hope that would pry open credit markets, get lending flowing again and jump-start the economy.

Read more: http://www.msnbc.msn.com/id/26940695/

[dipsydoodle]

1. Then its going to slow a whole lot faster

if a substantial proportion of that spending was by credit card. The days of easy credit are over for the foreseeable future.

[CoffeeCat]

2. This bailout is a flimsy band-aid on a gaping wound...

This bailout might temporarily help the economy, from the Wall Street side. It might
work temporarily--and that's if the criminal neocons don't pilfer and divide up the bailout
between themselves and their masters in corporate America.

This article speaks to the heart of why this bailout is almost irrelevant.

The crisis on Main Street--will ultimately sink the economy and further erode Wall Street.

Our economy has been artificially puffed up by debt spending. Consumers maxed their credit cards
and used their homes as ATMs, for years. Also, many retail outlets--such as furniture stores, appliance
stores, big-box retailers and home-improvement outlets--became finance companies. So many people financed
their purchases with credit from these stores. Did you know that Sears makes most of its money by financing
purchases? Sears is now a finance company that just happens to sell Craftsman tools and washing machines.
Most of that irresponsibly spending will grind to a hault--in all sectors. The credit cards are maxed and people
are in panic/savings/paying off mode--and those home-equity loans are difficult to get.

We're sitting on a massive bubble that is going to violently contract. There's no doubt in my mind that we'll see
a traumatic contraction in consumer spending. This will cause rampant business failures and Depression-like
unemployment.

The Main Street portion of the economy will implode---so when can all of us expect our trillion-dollar bailout?

[ThePowerofWill]

4. Yup, just smoke and mirrors to make the numbers look good for a minute.

Nothing more, nothing less.

Hell, i kept my money when i got it. I guess i'm just not a patriot, and wish to see America fail.

[BlueInPhilly]

3. Good!

American consumers have been spending way beyond their means. This is a self-correction. Macro-economics laws in play.

[Hawkeye-X]

5. Stimulus this, PAL.

My $1,300 (or whatever) check was eaten by IRS because we owe IRS about $3,500.

Thanks for nothing, Chimp.

Hawkeye-X