Did you decide to spend $1500 on a flat-panel TV for the entire family instead of the $4000 you would have paid buying individual gifts for everyone, including a diamond bracelet for your wife, a WII for the kids, and that fur coat your mom has been eying? Then YOU're the reason we're going into recession. Or so sayeth Fox. The article on the web site is more nuanced, but the television teaser was plain that cutbacks in spending by consumers is going to be the tipping point.
Bill Cheney, chief economist at John Hancock Financial Services, puts the odds of a recession as high as 40 percent. "There are a lot of headwinds and the economy probably has enough momentum to get through, but when things get rough, there are a lot of ways things could go wrong," Cheney said.
The fear is that people will clamp down on the spending and businesses will put a lid on hiring and capital investment, sending the economy into a tailspin.
By one rough rule of thumb, a recession occurs when there are two consecutive quarters -- six straight months -- when the economy shrinks.
The National Bureau of Economic Research, the recognized arbiters for dating recessions, uses a more complicated formula. It takes into account such things as employment and income growth. By that measure, the last recession was in 2001, starting in March and ending in November.
Tax rebates aimed at stimulating the economy were part of Bush's $1.35 trillion in tax cuts in 2001. They were credited with helping to make the recession short and mild.
Yes, folks, the forty-six bucks you got from Bush's 2001 tax cuts and promptly spent were what kept the recession from being worse than it was.
I pile on Fox, but the so-called "liberal" paper that just hired William Kristol and whose public editor defended the decision yesterday, climbs on board the "Spend Or We'll Shoot This Dog" bandwagon as well:
Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.
The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.
There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.
A raft of consumer companies — high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney — reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.
American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.
And consumer confidence, an important barometer of economic health, has plunged. Andrew Kohut, president of the Pew Research Center, says consumer satisfaction with the economy has reached a 15-year low, according to the firm’s polling.
Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze.
“People are clearly concerned that we are headed into a recession,” said Stephen I. Sadove, the chief executive of Saks Fifth Avenue, the upscale department store whose runaway growth throughout much of the year slowed markedly in December.
Gia Trumpler, 37, a travel consultant who lives in Manhattan, shops at luxury chains like Saks. But she is trimming costs where she can by bringing lunch to work from home, rather than eating out. “Everything just feels more expensive to me now,” she said, including the cost of heating her apartment this winter.
[snip]
There are some bright spots now in consumer spending. Sales of sports gear and electronic gadgets — particularly G.P.S. navigation devices and flat-panel television sets — have risen over the last three months. To Stephen Baker, vice president for industry analysis at the research firm NPD Group, that suggests there is still enough purchasing power for people to buy what they really want.
“We probably would not have seen strong sales for electronics products that people really want if the overriding issue was economic,” Mr. Baker said.
Someone ought to remind Mr. Baker of all those "eighteen months with no interest" payment plans that go with those flat-panel television sets.
So far, at least, Mr. Brilliant and I are both working. Three-dollar-a-gallon home heating oil is taking a toll, as well as increases in costs for electricity and gasoline, but the fact that we carry very little debt over and above the mortgage and we've delayed or foresworn the gratification of significant interior remodeling of the house until and unless we can afford to pay for it now, means that so far we're not hurting. On the other hand, we're not the kind of spenders that have been propping up this house of cards from the beginning. Still, we're reliant on two incomes, especially with these increased costs, and current economic conditions make us think three times now, instead of just twice, before spending.
So how are YOU feeling about your economic state? What do YOU expect this year to bring?
Aucun commentaire:
Enregistrer un commentaire