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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsConsumer Spending Probably Stalled in May: U.S. Economy Preview
Consumer spending stalled in May, a sign the biggest part of the U.S. economy may struggle as employment and wages cool, economists said before reports this week.
Purchases were unchanged last month after a 0.3 percent gain in April, according to the median of 75 estimates in a Bloomberg News survey before Commerce Department figures due on June 29. Manufacturing is weakening, while housing shows further signs of stabilization, other reports may show.
A slowdown in payrolls and unemployment above 8 percent have damped consumer confidence, which may keep restraining sales at companies from Darden Restaurants Inc. (DRI) to CarMax Inc. (KMX) Waning demand, together with concern about Europes debt crisis and U.S. fiscal policy, helps explain why the Federal Reserve last week extended a program to keep borrowing costs low.
Consumers are staying cautious, said Michael Hanson, a senior U.S. economist at Bank of America Corp. in New York. Job growth is sluggish and overall compensation hasnt been great. The economy is decelerating.
http://mobile.bloomberg.com/news/2012-06-24/consumer-spending-probably-stalled-in-may-u-s-economy-preview?category=%2F
RB TexLa
(17,003 posts)MrTriumph
(1,720 posts)As a small business owner, what is most critical for our crippled economy is to get consumers spending up. That will create jobs.
Savings helps only so much as it is then reinvested in American businesses. With our current lack of banking restructions, instead much of it is routed into commodities speculation which actually hurts our economy. And, as an aside, how much of savings is routed into loans to assist companies to relocate manufacturing overseas or outsource?
Until we address these bigger issues- and it appears neither party is interested- consumer spending is all we've got.
RB TexLa
(17,003 posts)so you can have?
MrTriumph
(1,720 posts)Hey, bonehead, listen up: In 2011, my business picked up due to new product introductions. These products were developed and made right here in the USA. And I'll add for your enlightenment that my business has never received a handout from any level of government.
The point is, to handle the increased business my company hired an extra person. And if, business continues to increase it may enable my company to hire another. That's how it works and has always worked for small businesses.
If you want to be pissy, take it elsewhere. DU deserves better than your getting personal tripe.
RB TexLa
(17,003 posts)care for people doing that.
nadinbrzezinski
(154,021 posts)what you are facing is the paradox of savings, noted first during the Great Depression.
You need people to spend to stimulate the economy... that is a reality, but people are rational self interested critters that will hold tighter to their money during economic downturns, increasing the hole.
To break this little vicious circle, that is where Keynes spoke of GOVERNMENT short term investments and job creation, which helps to break that vicious circle.
It is the conflict between macro economics, I need people to spend... in order to create demand, that will in turn create jobs, and micro economics, times are tough, I need to hunger down, and save.
Huey P. Long
(1,932 posts)nadinbrzezinski
(154,021 posts)for Keynseian economic policies. You bail out the people with a series of policies like a WPA, a Bank Holidays and things like that.
Which is exactly what brought the country out of the depression, and then we went into the 1937 mistake... like oh NOW...
Chan790
(20,176 posts)If you're saving right now you're hurting yourself more than you're benefiting. We're charging more in fees on balances below 5K than we're paying in interest...let me make that clearer, we're charging you for not spending, we're charging you for saving. We've cut our CD rates to match the rate we pay on savings. We want the money out of deposit...when it's circulating, it's creating more profits for us because businesses come in and take loans for infrastructure, people come in and take mortgages, our business clients do more business and we bill them for services by volume, the economy improves and the interest rates go up.
We're money-grubbing and evil, yet even we know the economy is going to shit the bed again unless we can force people out of saving.
DON'T SAVE!
nadinbrzezinski
(154,021 posts)sendero
(28,552 posts)... is not paying off at the present time, if you lose your job and have no savings well it's going to get really ugly really fast.
The Fed has been trying but they will fail. Nobody is going on a buying binge with this much uncertainty in the economy. Well, maybe a few idiots, but that is all.
RB TexLa
(17,003 posts)want and they want NOW! SPEND
nadinbrzezinski
(154,021 posts)bankers are folks looking at the macro economy.
You and I are looking at the micro economy.
Only way to break this... is with a good amount of government spending... like oh hiring police, fire, teachers, road department people... things like that
Chan790
(20,176 posts)they don't let me make decisions. What's more, we have no ability to compel government expenditures.
I was a branch partner. All we can do at the branch level is public-facing...we say "Take a business loan, the rates are great!" they say "F**k No! My sales are down and I have no idea when they're coming back up." Short of that, we get the notice from HQ in Atlanta to cut savings and CD rates to .05% (A nickel per $1000 on deposit per year compounded daily.) and raise the fee for deposit accounts with balances under $5000 to $9/month.
If you're committed to saving (like RBTexLA is), you're better off using the first deposit bank of mattress because at-least you have what you saved. Not only do I advocate not saving (beyond a rainy-day fund), I can't in good faith tell people it's a good idea when you deposit $200 and a year later there's $92.07 with interest because we took $108 in fees. (It's fucking thievery. I used to go to work and feel like a crook.)
It's the big fish corporations hoarding, the average small business owner I saw was as tapped out as the public. The only thing that is going to unclench the economy at this point is the compelled transfer of a massive quantity of wealth from the top to the bottom and government expendatures... two things that are not even on the radar. Blasphemous as it is, I'm forced to agree with Reagan...we should have ended Cap Gains classification and taxed them as regular income. They wouldn't be hoarding if they had to pay 40% on their gains, they'd be spending to escape taxation.
nadinbrzezinski
(154,021 posts)we do not tax them enough... yes there is correlation. Not only end cap gains... but I would also raise taxes on the top marginal rates to not just the Clinton Years... shoot me now, not just the Reagan years, but the Kennedy years.
But we are talking macro versus micro econ.
The small fish and John Q Public are trapped in the micro economy, while the macro econ measures we need to unclench this... are not even in the radar.
By the by, I also advise people to move from a regular bank to a credit union. The only reason is... the fees... if you need to keep a rainy day fund <--------- are far less.
By the way, that tax rate and end of cap gains... that will actually force large fish to either leave the country (I am sure they're thinking about it), or to protect themselves invest... one way to hide them from evil guv'ment folks and force that hoarding to be circulated.
RB TexLa
(17,003 posts)And I strongly disagree with you on the capital gains issue.
Chan790
(20,176 posts)You also probably disagree with my support of the transaction tax for Wall St.
We have no common ground on fiscal policy. That much is obvious at this point.
Chan790
(20,176 posts)Unfortunately, the way our economy is set-up currently...saving is always going to be bad in the near-term. Americans shouldn't save. Some people are going to harp on the savings rate anyways...but Americans still should not save. Savings interest rates are low to discourage saving intentionally...push the money out of savings and into the marketplace.
I recently left a bank and we were talking about charging people even more for savings than we already do because we don't want the money on deposit, we have nobody to lend it to anyways and we don't even want to pay the pittance of interest we're currently paying for economically-dead deposit funds. (Currently if you have less than $5000 on deposit with my former employer, we're charging more in fees than you're earning in interest. You're breaking even until you have the $25K to open a Money Market Account.)
They however should cut-up their credit cards and pay down debt if possible. I shock people that I can live comfortably on $25K...it's because I have nearly no debt. I have no savings either, saving money is neither helpful or economically advantageous. There is more economic utility to capital investment and spending on items of utility ATM.
girl gone mad
(20,634 posts)and your calls for austerity are completely misguided.
If the private sector wants to net save, the public sector needs to net spend to keep the economy in balance. If this doesn't happen, we end up in a deflationary spiral which creates a lot of misery and leaves our country poorly positioned to innovate and improve.
RB TexLa
(17,003 posts)Americans believe in.
nadinbrzezinski
(154,021 posts)Ask Hoover... that is what you are asking for... it worked wonders, didn't it?
But, but, that is the past... ask the Brits. They are following YOUR FORMULA and they are officially in a recession again... silly wabbits, they will push the country to a depression at the pace they are going.
dkf
(37,305 posts)Shouldn't repatriation tied to investments be encouraged as one of the best avenues to boost spending?
nadinbrzezinski
(154,021 posts)we did that once already in recent memory... and not one iota of spending from the private sector. IN fact, they are SITTING ON TRILLIONS as I type this. Tax the bastids, then they will invest it, to protect it from the e'vil Guv'ment!
You doubt this? Look up the numbers of actual, well investment and how they correlate with taxation rates.
dkf
(37,305 posts)nadinbrzezinski
(154,021 posts)and the break... you kid me... Republicans and Conservative Democrats will do that and pass such a bill.
This is probably one of the best jokes I have read on DU in close to ten years. It is funny.
BrendaBrick
(1,296 posts)though a bit off topic (in a way)...in another way - not so much:
Here's one possible solution to spend...if and when you have to spend - to seriously consider supporting Costco, Mercadona, Quick Trip & Trader Joe's for these reasons and as discussed here:
http://www.democraticunderground.com/1002850799
Together we can and will make a difference, (even if we don't really think we can)...we really can here folks!!!!!
BELIEVE IT.
Money Talks.
Tierra_y_Libertad
(50,414 posts)but the buyers are either broke or saving because of the bad economy.
And, they remember that buying a lot of stuff on credit is exactly what caused the economic disaster they're struggling with.
Of course, the government could pump some money into the economy by stopping the lost wars and taxing the corporations and rich. But, the people who could do that are on the payrolls of the rich and corporations. Catch-22 again.