Monday, August 29, 2011

What We Learned From The Great Recession

After the most severe recession in a generation, some would say several generations, one would think hard lessons would be learned -- the primary ones of which would be to stop spending and start saving. And, for a few brief quarters, it appeared the cure had taken.

But, not so fast . . .

This morning it was reported Americans increased their spending in July much more than expected. Indeed, spending jumped 0.8%, the biggest gain in five months, says the Commerce Department.

Ironically, income rose only 0.3%.

So, you may be asking, "Where did the American consumer come up with the other .5%?"

Out of his savings, of course. The saving rate slowed to 5.0, down exactly a half percent from the month before.

Of course, Wall Street heralded the disturbing development as good news, the Wall Street Journal trumpeting it as "a surprising sign of strength for the economy going into the second half of the year," ignoring the fact it is completely unsustainable.

Consumerism is the methamphetamine of the average American, and the addiction will prove equally as dangerous.



Anonymous Anonymous said...

Plus the fact that the spending was "back to school" and food related. "Spending" goes up when the gallon of milk goes up. No real increase in goods bought.

12:08 PM  

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