by Frank James
Consumer spending is about 70 percent of the economy, definitely the dog that waves the tail.
So when it falls substantially, as it did in September, the economy is in a hole it can't crawl out of until consumers start spending again. Which they won't so long as corporations keep announcing large layoffs and house prices keep falling. Which just feeds the whole cycle all over again.
The Commerce Department reported this morning that consumer spending fell by an inflation adjusted 0.4 percent in September.
This all has a political aspect to it, obviously. Congress wants a second stimulus package and the decline in consumer spending definitely produces more momentum to the pro-stimulus side of the argument.
Meanwhile, the decline in consumer spending could also be used by both Senators Barack Obama and John McCain to argue for their tax cuts. Lower tax would leave Americans with more disposable income, which could boost spending, though such tax changes and reduced taxes would be many months away at the very least.
Obama could also use the consumer-spending drop-off to argue more vigorously for tax cuts for lower and middle-income taxpayers since they would be more likely to spend the money than the wealthy, helping to push up the economy.
Comments
I would like to take this moment to thank, not only President Bush and Vice-President Cheney for their splendid job, while in Office, but I want thank the millions of Americans, who voted for them, not once, but twice !! Their reign of Error has been a disaster to all of America and a good deal of the world, not to mention the tragedy in Iraq !!
Then there is the Banking Scandal of 2008 and it's cast of Scoundrels, who have cheated American citizens out of house and home. Thanks, President Bush and Vice-President Cheney for your wonderful contribution to this disaster !! Let's not forget to thank Senator McCain and Governor Palin for their promise to continue the Bush-Cheney policies,which allow this cast of characters, to bleed our Treasury dry !! It is very hard to conceive of an America, without these thoughtful and conscientious Americans, President Bush and Vice-President Cheney. They have done so much for us, while in our White House. We will certainly miss their competency and compassion !! There will never be another pair like them, the Bush-Cheney tag team !! They will be greatly missed !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.
Posted by: Don Fitzgerald, Chicago | October 31, 2008 12:17 PM
Before we answer the call for a new "New Deal" -- to right the derailed economy with tax-payer funded investment in energy, infrastructure and education; stronger union empowerment; new restrictions on corporations and a guarantee of health care coverage for all, maybe we should take a moment to consider how well it really worked the first time. "...Senator Obama made the phrase 'defining moment' his own so it’s a good time to be aware that many thinkers are debating what kind of defining."
http://corner.nationalreview.com/post/?q=NWY0YmJhODY0YzQ0NTc3YzhhYTk3ZjM0M2NkZGI4MTY=
Posted by: Think First | October 31, 2008 2:00 PM
FITZ - You are welcome!!!
If Bush and Cheney were wrong about Iraq, what then does it make of all of these people:
http://www.freerepublic.com/focus/f-news/1051684/posts
If you recall, in Dec 1998, Clinton bombed Iraq for four days because of WMDs. So if Bush was wrong for invading a soveriegn country, wouldn't that make Clinton wrong for bombing a soveriegn country?
If something happened to the WMDs between Dec, 1998 and March, 2003, can you tell me what it was? and when you knew it?
As far the banking scandal, this isn't the case of too little regulation, this is the case of the gov't "encouraging" banks to loans to customers that can't afford to by houses - this created an artifical demand for houses, which created higher prices, ... until the bubble burst. So the next time Congress has hearings on this subject, maybe they should start with Barney Frank and Chris Dodd as the first two witnesses and then follow it up with the former and current CEOs of Fannie and Freddie - then we will get to the root cause of this problem.
So Fitz, what happened to all those WMDs between
Posted by: Terry | October 31, 2008 9:26 PM