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Consumer spending?

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May 06, 2010 – Comments (5)

This is curious to me, consumer spending above the peak in November 2007?

It is an estimate so if it is anything like estimates I have relied on for decision making it is garbage.  And how much was artificial due to programs to increase consumer spending?

I certainly have been spending like crazy because of home renovations.  

I also wonder how much of the consumer spending is because of people living in homes where they aren't paying rent or mortgage.  How much of the economy has moved from the home equity ATM to the squatting ATM?

5 Comments – Post Your Own

#1) On May 06, 2010 at 10:57 AM, VintageCat (< 20) wrote:

Probably a combination of things: The squatting ATM scenario as you mentioned plus close to two years of self imposed austerity on the part of those folks with jobs and money has gotten tiresome. People want to regain a sense of normalcy and may be returning to old habits and ways, their savings burning a hole in their pockets.  

I suspect the incentives to continue to save a very few and far between, seeing that the irresponsible get the bailouts, get to live in "free" housing without consequence and the savers get stuck with the bills (taxes) in this economy.  

Adding to this, with the prediction of inflation on the part of many Americans in recent polling, spending on needed/desired things now might seem like the wiser path than watching one's money lose it's purchasing power in money markets that can be frozen, in dollars that can be devalued, in stocks that can tank based upon bad news from other sectors.  Most of us don't have clue where to park our wealth when even the "gold standard" safety of US government guaranteed bonds have lost their safety luster with the economic house of cards slowly coming apart at the seams.  Some might say, "Damn the torpedos, I'm buying the home theater." or maybe it's bottled water and cases of pork and beans depending upon the severity of one's outlook for the future.

That's how it looks from the cheap seats....  

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#2) On May 06, 2010 at 11:18 AM, amoldov (31.79) wrote:

I have the explanation for the increase in consumer spending. My wife has been to the mall a lot lately.

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#3) On May 06, 2010 at 12:15 PM, russiangambit (29.40) wrote:

I think the consumers are spending to the limit on credit cards and then defaulting on them judging by the credit card losses.

http://preview.bloomberg.com/news/2010-05-06/banks-hemorrhaging-money-with-credit-cards-aspiring-to-be-american-express.html 

And then they default on the mortgage too to top it off and live in the house for free for 2 years.

However, what are they planning to do when they are compeltely cut off from credit as a result,  is not very clear.

 

 

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#4) On May 07, 2010 at 12:14 AM, dwot (45.74) wrote:

VintageCat,

I am spending on things that might be put off for a year or two.   The money isn't earning anything in the bank and I don't trust the markets right now.  Where to park money is a very good point.

I wonder how many had heart attacks today...

amoldov, I think my husband would argue that it has been me that has been to the mall lately.

russiangambit, seems there is always another silly entity that comes along and lends money.  I remember when I was much younger, and very financially responible, I applied for some kind of credit card at the same time as my sister and a friend.  We were at the mall and we liked the promotion they were offering for filling out the form.  Well, my application was declined and I was the only one of us 3 who had never gotten myself in financial trouble and had never had a late payment on anything.  My sister got $500 credit limit.  She wasn't terrible, but I had to help her out a couple times.  The friend was awful.  I think she had her credit cards frozen in a big block of ice in the freezer to keep herself from using them and trying to get the debt under control.  She got $1000 credit limit...

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#5) On May 07, 2010 at 12:24 AM, topsecret10 (< 20) wrote:

 Consumers are spending a lot of time on UNEMPLOYMENT. They are consuming peanut butter and jelly sandwiches with a tap water chaser.....   By stock In Smuckers  :)

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