From CBS News:
Consumer spending drives 70% of the economy. When consumers put their wallets away, the economy has trouble making a U-turn.
[According to Jay Bryson, Global Economist, Wachovia Corp.], “If people just continue to clamp down and keep it clamped down for a long period of time, then it’s going to be more difficult to gain traction in terms of the recovery.”
And that recovery, when it finally comes, will be significantly weaker because Americans are saving more.
Did you hear that, Oprah? Seventy percent of our economy. Saving in the extreme is not a responsible solution.
Related links:
Save the economy three stores at a time
Seth Godin mentions The 3/50 Project
CNBC host Erin Burnett reminds us the battle is about more than just money
Enough with the carnage
Click here to tell me what you think....
I was so excited to see this today! I am so with you! You read my mind!!! Thank you for posting this! I feel the same way! We need people to spend, spend, spend! I’m not saying go into debt or spend beyond your means. Just fiqure out what you can comfortably afford even if it’s $10 and spend it into your community. Good job!! I needed to know that someone else was thinking and feeling the same way I was today! Thank you!
The media began with constant “how not to spend money” updates. It took a few months of this constant barrrage for the majority of the country who still have jobs to begin to think…they must know something I don’t know, and take this knee jerk advice to heart. We need someone to scream, “if you have a job…take that vacation, take your family out to eat, and buy a new pair of shoes!” I appear monthly on a local TV station for the past two months they have asked me to offer money saving solutions, and I have informed them that this is not what my customers care about. They want to feel good right now, so I want to offer feel good ideas. Consumer confidence has been trampled on by the media, which gives them something to report on. What a vicious circle.
But how messed up IS an economy based on 70% consumer spending…I mean am I the only one who thinks that is completely silly? Should our GDP really depend on a robust Christmas shopping season? The problem here is we need systematic change – we HAVE to stop measuring the progress in our economy by consumer measures. The GDP was never designed for what we use it for. In the past 50 years our economy has “grown” by these measures but we as a nation have not become any happier or more content with our lives. There are alternative measures out there..and countries all over the world are starting to use them.
Editor’s note: Please keep in mind the lion’s share of that 70% comes from food, fuel, and other essential items. Discretionary spending is, by far, the minority of the GDP.
Jimmy Carter learned the power of American consumers when he thought it would be a good idea to suggest everyone stop using their credit cards. Talk about “unintended consequences!”
I have to laugh. After the World Trade Center bombings, the president was pounding the pavement with his “spend money or the terrorists win” rhetoric. So we spent. And spent. And a few years later, the economy sort of imploded.
Of course, it’s not that cut and dried. Fifteen years ago, people bemoaned the dismal savings rate. A shocking number of people still haven’t saved anywhere what they’re going to need for retirement. It’s going to come back around.