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Americans have record wealth, but arenít spending it
Washington Post ^ | 06/17/2013 | Robert Samuelson

Posted on 06/18/2013 5:50:17 AM PDT by SeekAndFind

In the economic history of our time, June 6, 2013, ought to occupy a special place. That’s the day the Federal Reserve disclosed that the net worth of American households — the value of what they own minus what they owe — hit $70 trillion, a record that exceeded the previous peak before the 2007-09 financial crisis. Higher stock prices and a long-awaited housing recovery are slowly restoring Americans’ lost wealth. By all rights, this symbolic crossing ought to improve confidence, prompt consumers to spend more freely and increase the economy’s growth.

Maybe it will. But don’t hold your breath.

The “wealth effect” isn’t what it used to be. For those who have forgotten, this refers to households’ tendency to spend some part of their increased real estate and stock market wealth and thereby boost the economy. During the boom years, Americans borrowed lavishly against rapidly appreciating home values. One Federal Reserve study estimated the extra cash at $700 billion annually from 2001 to 2005. Now psychology has changed. Careless optimism has given way to stubborn cautiousness. Wealth gains don’t translate into similar amounts of higher spending.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: savings; spending; wealth
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1 posted on 06/18/2013 5:50:17 AM PDT by SeekAndFind
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To: SeekAndFind

bfl


2 posted on 06/18/2013 5:51:40 AM PDT by Yardstick
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To: SeekAndFind

Does anyone really believe what the Federal Reserve says?

Does anyone believe what the Washington Post says?


3 posted on 06/18/2013 5:53:59 AM PDT by Venturer
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To: SeekAndFind

I highly doubt it


4 posted on 06/18/2013 5:54:19 AM PDT by yldstrk (My heroes have always been cowboys)
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To: SeekAndFind

Welcome to the Obama Economy. In it, anyone taking these type of loans is a fool. And anyone taking an ARM for more than a year is sitting on a powder keg.


5 posted on 06/18/2013 5:54:59 AM PDT by sr4402
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To: SeekAndFind

Consumers are up to their eyeballs in credit card debt and are trying to pay off the bills run up during Obama’s never-ending recession. Many have unemployed sons and daughters living back at home, some with children. It will only get worse next year, when ObamaCare robs the Middle Class of what little savings they have.

This is the real world outside the enclaves of the wealthy and government workers with cushy salaries and benefits.


6 posted on 06/18/2013 5:55:02 AM PDT by txrefugee
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To: SeekAndFind

When socialists rule, people hold on to what they have. We can’t spend money that we may need to survive on later.


7 posted on 06/18/2013 5:56:08 AM PDT by John O (God Save America (Please))
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To: SeekAndFind
you mean those Americans whose homes weren't foreclosed on. And those Americans who didn't drain their 401K's to survive the Second Great Depression.

File under Insult-to-Injury.

8 posted on 06/18/2013 5:58:05 AM PDT by schm0e ("we are in the midst of a coup.")
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To: SeekAndFind
The left is thinking: "70 trillion ripe for confiscation".
After all, people aren't using it.
Please tell me I'm wrong.

9 posted on 06/18/2013 5:59:26 AM PDT by BitWielder1 (Corporate Profits are better than Government Waste)
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To: txrefugee
*Many have unemployed sons and daughters living back at home, some with children. It will only get worse next year, when ObamaCare robs the Middle Class of what little savings they have.*

Hey!

You know what will fix the economy and help out of work Americans?

Open the borders, let tens of millions in!

That's the ticket!

.....at least that's what they're voting on soon...

10 posted on 06/18/2013 5:59:32 AM PDT by PATRIOT1876 (The only crimes that are 100% preventable are crimes committed by illegal aliens)
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To: Venturer

LOL-

I believe them when they just told us more people are
unemployed- now inching backup- and the biggest
decrease of workers EVER in the work force is really...

A GOOD thing!!

Orwell never wrote fiction- he really saw our immediate Future.


11 posted on 06/18/2013 6:00:14 AM PDT by mj1234
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To: BitWielder1

that is exactly what the thieves are thinking


12 posted on 06/18/2013 6:00:19 AM PDT by yldstrk (My heroes have always been cowboys)
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To: SeekAndFind

The national debt is a quarter of that and growing every day. We don’t have to spend it. Washington is already doing it for us.


13 posted on 06/18/2013 6:01:54 AM PDT by tacticalogic ("Oh, bother!" said Pooh, as he chambered his last round.)
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To: SeekAndFind

Americans need to re-industrialize our own nation.

Now.

We do not have a great deal of time. Forget about Obama. Think of global geo-politics.

Everyone on the world is increasing in productivity, and all the armies in the world are becoming more formidable.

Except America’s. Our industry is being off-shored, and our industry is being sold. Has been now for nearly 30 years.

One after another. Sold. Millions upon millions of formerly productive Americans, now unemployed and on government support.

Forget about Obama. Stop selling off American factories, and start bringing home American jobs once again.

Now.


14 posted on 06/18/2013 6:02:06 AM PDT by Cringing Negativism Network
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To: SeekAndFind

Yes. Record wealth Weimar Republic style. Just wait until gasoline hits $9.00 per gallon like that idiot Steven Chu wanted. Then we will really be wealthy!


15 posted on 06/18/2013 6:03:22 AM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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To: SeekAndFind
Higher stock prices and a long-awaited housing recovery are slowly restoring Americans’ lost wealth.

And what's going to happen when Bernanke quits pumping a trillion dollars a year of Fed money into the stock market?

16 posted on 06/18/2013 6:03:30 AM PDT by E. Pluribus Unum (People with religious faith in government are far crazier than people with religious faith in God.)
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To: Jimmy Valentine
Yes. Record wealth Weimar Republic style. Just wait until gasoline hits $9.00 per gallon like that idiot Steven Chu wanted. Then we will really be wealthy!

Chu, like his fellow travelers, is a misanthrope.

He looks at those peasants out there cluttering up his landscape, depriving him of the Walden paradise he deserves, and he wants them all dead.

17 posted on 06/18/2013 6:05:40 AM PDT by E. Pluribus Unum (People with religious faith in government are far crazier than people with religious faith in God.)
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To: SeekAndFind

$70 trillion isn’t what it use to be

literally

in ‘bush dollars’, that’s about $35 trillion


18 posted on 06/18/2013 6:07:42 AM PDT by sten (fighting tyranny never goes out of style)
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To: SeekAndFind

“By all rights, this symbolic crossing ought to improve confidence, prompt consumers to spend more freely and increase the economy’s growth. Maybe it will. But don’t hold your breath.”

Why would it prompt people to do anything but sew gold into their mattresses, with a Che Guevara want-to-be in the White Hut?


19 posted on 06/18/2013 6:10:35 AM PDT by SharpRightTurn (White, black, and red all over--America's affirmative action, metrosexual president.)
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To: SeekAndFind

With the EPA and the IRS attacking productivity, why would anybody have confidence in their future earning power?

OBTW, as someone in the midst of moving, we have way more stuff than we need!

Pick a room in your house and make a trash pile and a charity pile.
Do this once a month and you’ll be surprised.

Don’t wait for a move.


20 posted on 06/18/2013 6:11:42 AM PDT by G Larry (Let his days be few; and let another take his office. Psalms 109:8)
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To: SeekAndFind

Its mostly paper wealth due to overvalued stocks


21 posted on 06/18/2013 6:11:44 AM PDT by Java4Jay (The evils of government are directly proportional to the tolerance of the people.)
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To: SeekAndFind

What are you going to buy? Real estate that has a better than 50-50 shot of declining in value? Crappy eco cars that have been designed by green czars in the Obama Administration? Moochelle-approved Healthy For You foods? Hyper-queer clothing from the overstock sale at JC Penney?


22 posted on 06/18/2013 6:13:26 AM PDT by Buckeye McFrog
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To: sr4402

Refi happens today...
Getting out of an arm to a higher rate, but lower than a one year “adjustment”.


23 posted on 06/18/2013 6:14:29 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: E. Pluribus Unum
Regretfully you are correct.

There will come a day, and it comes closer, when Mr. Chu, screaming and wetting himself will be judged by the people he so despises.

24 posted on 06/18/2013 6:14:30 AM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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To: John O

Protect the seed corn.


25 posted on 06/18/2013 6:14:41 AM PDT by griswold3 (Quis custodiet ipsos custodes)
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To: Buckeye McFrog

American industry.

Start buying now. Or you may be too late.


26 posted on 06/18/2013 6:14:43 AM PDT by Cringing Negativism Network
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To: G Larry

i used to put a lot of stuff out for the trash but now, the trash company will only take 96 gallons of trash ea week! I told them if you want a nice city you take all the trash people put out, I told them to bill me for anything I put out that was over the limit, but they said “That’s not how it works.” They further said it was a county “law”. I laughed and said counties don’t get to have “laws” only states do. No matter, they won’t pick it up


27 posted on 06/18/2013 6:15:27 AM PDT by yldstrk (My heroes have always been cowboys)
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To: yldstrk; BitWielder1

tools, land, skills, etc - hard to liquidate to pay off the “gimmedats”.


28 posted on 06/18/2013 6:15:29 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: BitWielder1

“You’ve made enough money” -Obama


29 posted on 06/18/2013 6:16:11 AM PDT by griswold3 (Quis custodiet ipsos custodes)
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To: SeekAndFind

I’m spending my wealth as fast as I can. The problem is that the shelves that are supposed to hold ammo and guns are nearly empty, so it’s hard to spend on what we need under the current regime.


30 posted on 06/18/2013 6:18:05 AM PDT by Pollster1 ("Shall not be infringed" is unambiguous.)
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To: sr4402
And anyone taking an ARM for more than a year is sitting on a powder keg.

Maybe. I said exactly that a couple years ago and I was wrong. I won't be wrong forever, but it could be a while longer.

31 posted on 06/18/2013 6:19:27 AM PDT by palmer (Obama = Carter + affirmative action)
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To: SeekAndFind

The media (as an arm of the government and business) does everything it can to promote debt based consumerism.

Maybe some portion of Americans are waking up to the fact that there is more to life than endlessly buying stuff.


32 posted on 06/18/2013 6:36:56 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: SeekAndFind

It’s really simple....the stock market is not real. It is merely a reflection of the QE policy / printing money policy. It will most likely collapse by up to 30% in the next year or so. Housing is NOT recovering and banks are dragging their feet on issuing new mortgages to people who are AAA credit worthy. PEOPLE HAVE NO CONFIDENCE IN THE FUTURE UNDER OBAMA AND HIS COMMIE POLICIES. AMERICA IS HEADING TOWARDS FINANCIAL COLLAPSE. Simple as that. Only when America becomes fiscally responsible, eliminates the socialist programs and creates jobs by getting us back on track will we stand a chance of resuming America greatness. Otherwise we are DETROIT on a national level.


33 posted on 06/18/2013 6:39:58 AM PDT by zzwhale
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To: SeekAndFind

Wealth gains don’t translate into similar amounts of higher spending.


Because wealth doesn’t generate any income. We have never been a socialist/fascist country before. New rules...............


34 posted on 06/18/2013 6:41:51 AM PDT by PeterPrinciple
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To: BitWielder1

Well, why not. Afterall, we didn’t make that. It’s the government’s money. Sez so right there on the dollar bills. /s


35 posted on 06/18/2013 6:42:21 AM PDT by TADSLOS (The Event Horizon has come and gone. Buckle up and hang on.)
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To: SeekAndFind
the value of what they own minus what they owe — hit $70 trillion,

And that number may well continue steadily to increase even as actual assets decrease in real value. The soaring of the stock market and the increase in RE values is arguably merely the primary price effect of the current inflation.

36 posted on 06/18/2013 6:44:33 AM PDT by arthurus (Read Hazlitt's Economiws In One Lesson ONLINE http://steshaw.org/econohttp://www.fee.org/library/det)
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To: SeekAndFind

The aren’t spending it because the present trajectory of events and policy scares every rational person stiff. Moreover, this trajectory takes us right into Rampant Inflation Land, that means the direct destruction of all wealth stored in any form of money.


37 posted on 06/18/2013 6:45:28 AM PDT by theBuckwheat
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To: palmer

And anyone taking an ARM for more than a year is sitting on a powder keg.
Maybe. I said exactly that a couple years ago and I was wrong. I won’t be wrong forever, but it could be a while longer.


Who is the biggest debtor? They can’t allow interest rates to rise. When it does happen it is collapse no matter if you had short or long term debt.


38 posted on 06/18/2013 6:48:03 AM PDT by PeterPrinciple
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To: SeekAndFind

Financial crisis

2008 - 2016


39 posted on 06/18/2013 7:16:07 AM PDT by Vaduz
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To: G Larry

Been doing that GL.

I give a bunch of stuff to the vets almost monthly.


40 posted on 06/18/2013 7:30:54 AM PDT by bicyclerepair (Inbred, pedophile-worshipping, misogynists (mozlums) offend me.)
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To: BitWielder1

No you’re not wrong.

This is why inflation is relatively low. When people do start spending money freely watch out.


41 posted on 06/18/2013 7:47:04 AM PDT by desertfreedom765
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To: SeekAndFind

You’ve all heard of double-speak. This is at least quadruple-speak.

While this may be true, and I will admit to having a very hard time believing it, it’s like being thrilled for having $1000.00 when by rights you should have had $1333.00.

We have 23.5% of our potential workers out of work. None the less, these entities whoop it up and make happy faces for all to see.

I AM NOT impressed.

Some have barely more than they used to giving strength to this shameful announcement, and one third have nothing. Who heralds that? Certainly not these Orwellians.


42 posted on 06/18/2013 8:41:32 AM PDT by DoughtyOne (Speaker John Boehner (R) no (D) no (R)... has more waffles than IHOP.)
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To: SeekAndFind
It isn't really "record wealth". Those smart enough to accumulate anything know what's important is the spending resources it generates.

I'm typical of retirees and others who worry about future resources. Used to be, money in the bank generated at least 4% interest that could be depended on. That was money that was spent by those on fixed income.

Now, with interest rates so low, the assumption is that you have to hold on to and increase savings as much as possible.

43 posted on 06/18/2013 8:45:58 AM PDT by grania
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To: MrB
Refi happens today... Getting out of an arm to a higher rate, but lower than a one year “adjustment”.

Anything to get your way out of them. Took us 7 years of hard work, a refi was part of the plan. Now it and all financial debts are gone.

You don't want to be in late in life and have a Mortgage around your neck!

44 posted on 06/18/2013 9:33:57 AM PDT by sr4402
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To: SeekAndFind
the net worth of American households — the value of what they own minus what they owe — hit $70 trillion, a record that exceeded the previous peak before the 2007-09 financial crisis.

That $70trillion is not only inflated dollars but it's spread across a bigger population.  Correcting for the CPI and population growth--

--we're seeing per capita real net worth still way behind where we were.

45 posted on 06/18/2013 9:42:42 AM PDT by expat_panama
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To: PeterPrinciple; palmer
Who is the biggest debtor? They can’t allow interest rates to rise.

On Individual Mortgages? - your whistling Dixie.

When it does happen it is collapse no matter if you had short or long term debt.

Not for those on fixed interest rates or those having no mortgages or better yet no debt.

46 posted on 06/18/2013 9:44:26 AM PDT by sr4402
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To: SeekAndFind
There are lots of "once burned, twice shy" people out there. Yes, they've recovered much of their wealth due to the stock market's rebound -- but not only is that wealth "on paper," but, as has been pointed out elsewhere on this thread, stocks have been artificially inflated by the Fed.

Fear of coming inflation, rational or not, plays into the saving over spending mentality. Baby boomers and even younger generations are focused on high tuition costs for their offspring (and are treated to daily horror stories about student indebtedness), and on spiraling medical costs, a big consideration for those who are getting into their 50s and 60s.

A high priority for many, given their fear of a relapse in the overall economy, and/or their fear of rising taxes at the federal, state, and local levels, is to become debt-free -- with the possible exception of a mortgage on their primary home, and even there, some are aggressively paying down their mortgages, and/or refinancing to shorter-term (10 or 15 year) fixed-rate mortgages.

With that sole exception (and mostly because mortgage payments are still treated -- for now, at least -- favorably by taxation policy), the goal for many is to get out of all debt, despite the fact that financing rates on big-ticket items such as cars, home improvements, and appliances are at a near-record low rate. Whether this reflects an overly cautious attitude, or a prudent one, the fact is that many people are absolutely refusing to use their credit. No margin account with their broker; no new car unless or until they can pay cash; and obviously, no credit card balances being carried. And so, spending gets cut across the board -- dining out; vacations; clothing; home furnishings.

At the lower end of the socio-economic scale, such economies are not matters of choice, but necessity. What seems to have changed (if you buy the premise of the column -- and I largely do) is that those who can spend are increasingly opting not to.

Higher still in the socio-economic spectrum, sales of super-yachts and private jets are growing. But I see a great deal of caution in the upper-middle class, and even among those who are economically comfortable, but a notch short of great wealth.

47 posted on 06/18/2013 10:20:30 AM PDT by southernnorthcarolina ("Better be wise by the misfortunes of others than by your own." -- Aesop)
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To: SeekAndFind

And the elephant in the room: we have $110T+ in unfunded liabilities. It took ~100 yrs. for the ‘promises’ of the 2-party cartel to have stripped each and every one of We the People of any/all Posterity; with nary a peep from Peter nor Paul in the process.


48 posted on 06/18/2013 10:24:25 AM PDT by i_robot73 (We hold that all individuals have the Right to exercise sole dominion over their own lives - LP.org)
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To: southernnorthcarolina
But I see a great deal of caution in the upper-middle class, and even among those who are economically comfortable, but a notch short of great wealth.

Exactly. That's the customer base for our stores, and they are spending much more carefully than they did even two years ago.

Since it became apparent - around last June - that Obama was likely to be reelected, discretionary retail spending has fallen sharply. Most of the retail sales "up" figures you hear in the MSM are about price increases for gasoline and food.

49 posted on 06/18/2013 10:27:58 AM PDT by Mr. Jeeves (CTRL-GALT-DELETE)
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To: Cringing Negativism Network; All
Here comes the flood of Freepers who want all of us back on assembly lines stamping car parts and sewing shoes.

The last election campaign featured great angst over the loss of manufacturing jobs. The number of U.S. manufacturing jobs has fallen, but it has little to do with outsourcing and a lot to do with technological innovation — and it’s a worldwide phenomenon. During the seven years from 1995 through 2002, Drezner notes, U.S. manufacturing employment fell by 11 percent. Globally, manufacturing jobs fell by 11 percent. China lost 15 percent of its manufacturing jobs, and Brazil lost 20 percent. But guess what. Globally, manufacturing output rose by 30 percent during the same period. Technological progress is the primary cause for the decrease in manufacturing jobs. -Walter E Williams

50 posted on 06/18/2013 2:28:45 PM PDT by gura (If Allah is so great, why does he need fat sexually confused fanboys to do his dirty work? -iowahawk)
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