Posted on 05/24/2013 6:36:53 AM PDT by shove_it
SAN LUIS OBISPO, Calif. (MarketWatch) The Dr. Boom scenario: America is about to unleash a spending spree. Years of self-denial give way to pent-up demand, predicts UBS economist Maury Harris in USA Todays bold lead story.
His clue? Consumer sentiment: Harris estimates that in the next five years, catch-up consumption will boost annual consumer spending growth by a half point to above 3% from about 2%.
Reassuring? No, wishful thinking. Be very skeptical. As Robert Kuttner, author of the new Debtors Prison: The Politics of Austerity Versus Prosperity once wrote in BusinessWeek, What do you call an economist with a prediction? Wrong. ...
(Excerpt) Read more at marketwatch.com ...
This seems to me to be a very reasonable prediction.
While households with incomes under $50K are pretty well tapped-out, households in the top third, with incomes above $75K, have beeen cutting back and paying off debt. Eventually, everything wears out, and you have to buy something new. They will not necessarily spend wildly, but they will try to get good deals on necessary items.
Bernake ain't gonna end Ogats..
This is another smoke screen move to keep Benagzi-EPA-Treasury-IRS-and all the other Gates off the front page...
Pay no attention to the man with the printing press behind the Curtain...
It’s almost time to short the SPY, mREITS and home builders, just like 2007.
They will not necessarily spend wildly, but they will try to get good deals on necessary items.
It takes more than people wanting or needing stuff to bolster the economy. It takes them having the means to purchase it.
Realtors, home inspectors, appraisers and homeowners are people...those who scream, NEED TO RAISE RATES NOW instead of a gentle, slow almost innocuous way, are telling us in the housing industry, “be damned”...there is no knee-jerk way to do this. Everyone will be hurt but there are ways of not killing us.
Stu , O what’s da difference :-)...
I don’t think things will be clear at all. Right now, there is a bizarre economic phenomenon at work that is evident with even a little scrutiny: inflation and deflation are happening at the same time.
That is, big jumps in retail prices for many items are all happening at once, in odd ways, like a $1 per unit price increase for hundreds of items. But at the same time, other products are getting irrational discounts, even non-perishable items.
While commodities usually are discounted at the start of the season, getting more expensive over time, some of them are now getting “fits and starts” pricing, vacillating without reason. A dollar a pound one week, then 10 pounds for a dollar the next, then back to a dollar a pound the next, then *back* to 10 pounds for a dollar the next.
Now this is all happening with low level retail goods, and more than anything else is demonstrating fluctuations in the supply chain, which could be at production, transportation, or wholesale level.
If commodities speculation enters into it, the market could suddenly lurch from inflation to hyperinflation; or there could be sudden deflation, liquidity drying up, where products become worth so little it is not worth it to transport them to market.
This happened at the start of the Great Depression, where the saying was “You could buy a pound of hamburger for a nickel, but nobody had any nickels.” A bushel of wheat cost 25 cents (currently $7/bushel), and corn was burned for fuel because it cost more to take to market than it was worth. (Even though the Dust Bowl had wiped out tens of thousands of farmers, there was still too much food, but none in the stores.)
In any event, the government has worked so hard to prevent even a small market correction, that pressure is building up for a horrific and international collapse, where “free” anything becomes impossible. “Cash on the barrel head”, in whatever form “cash” takes.
Also, people who have kids know that families are getting nickled and dimed to death. There is now a fee for everything a kid does at school or outside of school.
Yeah, things wear out and are replaced on an as-needed basis, but I see no wholesale splurging or even mini-splurging. We live in an Obama austere climate. Americans feel assaulted by ObamaCare and psychologically things such as the Boy Scouts. They are hunkered down and focused on survival — not on splurging or partying.
Helo Ben is wisely bailing in August to concentrate on his book deal and speaking engagements.
So what if people buy a whole boatload of crap?
What difference will it make?
It is all just offloaded from ships, which come from China.
People wake up. We don’t make things anymore. We have no way to build a boom.
We need to return American industry now.
Now.
Yup. We’ve morphed into a great big Japan.
THAT’S the plan! It’s the Cloward/Piven Marxist plan to destroy the U.S. from within.
Ha! I just traded in my 15-year-old car on a 4-year-old car. I don’t drive enough to justify buying a new car.
And cars do last much longer than they used to, if you maintain them properly.
I disagree. In an overly advertising society, US consumers (especially women) are psychologically conditioned to consume. Consumption is based on meeting emotional needs, not fiscal reality. Had friends who spent more on Xmas shortly after the crash. When I ask the husbands if they were financially better off and retired most of their debts, they said they were neutral or slightly better off, but not fully recovered. Once a small amount is saved, the wives scoff it and run off to the Mall during Christmas and charged and spent it all. As one husband explained it to me, his wife had Mall withdraw when they were financially strapped. Frugality was once a Yankee trait, now we are just people who love to buy stuff.
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