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A really interesting read about the prospects ahead for the U.S. economy that avoids the partisan hackery so common when we discuss these issues here. It, gulp, contextualizes the U.S. economy within the world economy and finds that our current recovery is pretty much par for the course and indeed better than most.
Quote:
Economists Carmen Reinhart and Kenneth Rogoff compiled data on every financial crisis they could find going back to the 14th century. The conclusion of their ground-breaking research: Little can be done to coax households to spend after they’ve watched considerable wealth vanish before their eyes. The U.S. savings rate is now above 4 per cent, compared with zero ahead of the recession. That suggests a new era of American prudence that could lower the risk of another financial crisis. But that’s money that isn’t buying stuff at home or from abroad. Consumption accounts for some 70 per cent of U.S. GDP, and the U.S. constitutes 20 per cent of the global economy.
“The U.S. recovery is following the same dreary path of other advanced economies that have experienced financial crises,” Mr. Carney said in his Calgary speech.
The situation is not entirely hopeless. Treading water is better than sinking. The European Central Bank this week unveiled a new program to ease the region’s debt crisis, and the Federal Reserve is expected to take new stimulus measures next week. Monetary policy may have lost its power to propel, but it should keep economies afloat. Stock markets generally are stronger this year. The biggest corporations are piling up record levels of cash.
That's pretty much what it feels like. Americans are spending less, and many are also being paid less. Companies like Walmart are so large that they can rake in billions on microscopic margins. Many corporations will use their size as a competitive edge. As for American households... Who knows what will happen.
I know I am not spending much these days. $30 on groceries a week, $20 on gas every other week, rent and utilities... I have not made a major purchase in a couple years that I can recall. Being debt free is the best we can hope for these days. That's the new American norm. I honestly feel like this recession has completely change the way American think, and spend.
I know I am not spending much these days. $30 on groceries a week, $20 on gas every other week, rent and utilities... I have not made a major purchase in a couple years that I can recall. Being debt free is the best we can hope for these days. That's the new American norm. I honestly feel like this recession has completely change the way American think, and spend.
It hasn't backed my wife off one bit. She still buys what she needs to keep things going and maybe a bit more, now and then.
The only thing close to a major expenditure for me has been this computer. I have even stopped buying clothes in getting ready to not need them too much longer. Don't want to leave my wife with a lot of unworn clothes of mine.
I would say my quality of life has definitely decreased over the last four years. I really can't remember the last time I went shopping for new clothes.
Long-term, and that means decades, not years, the new normal and a free Democratic America are mutually exclusive. The new normal, sustained over such an extensive period, delegitimzes the notion of the American Dream. If that happens, via indirect methods, the old USSR and OBL win. For such an event would elimnate the moral compass that truly built America.
I would expect voter participation rates under such circumstances to drop below 25% for presidential elections, fully making a mockery of them. Worse for all other offices.
That is why we need any incentives to foster business growth, on a massive scale, in the private sector..NOW, as only greatly reducing the ratio of available workers to jobs can reverse this very dangerous situation.
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