Why Do You Think Consumer Spending Is So Anemic?

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   Rock_njposted 7 years ago

   Why Do You Think Consumer Spending Is So Anemic?
   
   Despite an economic recovery that is going on 8 years and lower fuel costs, consumer spending numbers in the US are rather weak and is some months falling.  Why do you think this is?  Is the money being spent elsewhere or saved?

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   cobrienposted 7 years ago

   I think people are saving in case of another economic failure, or they are just being more careful on how they spend their money. Another thing that I have noticed regarding the lower and middle socioeconomic classes is that the supposed economic recovery has not helped much. The lower classes got their lower paying jobs back, but still don't make enough to get off government assistance and the middle classes who got into debt to keep from losing all they had are still trying to get out of that debt, which takes time.

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      Rock_njposted 7 years agoin reply to this

      I do think it's hard for people at the bottom rungs to keep up with inflation.  Medical costs, for examples, continue to spiral higher, which takes a big bite out of anyone's extra money they have from lower fuel costs.

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      fpherj48posted 7 years agoin reply to this

      Oh! speaking of medical bills: I broke a tiny piece of tooth (bottom molar) on a piece of hard candy. Had to get it repaired. 1 tooth, 1 tiny hole= $600.00!  Maybe it's not too late to go to Dental School??

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   lions44posted 7 years ago

   Fear. Cobrien is right.
   
   I was lucky to get through the bad economy somewhat unscathed, but many others were destroyed.  Seeing neighbors just abandon their homes and a dramatic increase in homelessness in my town has scarred me. Some homes were empty for almost 3 years and I saw one for over 5 years.
   
   For the first time in years, I think families are saving. Much of that has to do with college expense and overall living expenses for those w/children.  That might not be such a bad thing.  We do need to save a lot more for the future. We're way behind other Western countries.  I know the consequences of that might be a temporary stagnation. 
   
   The economy's metrics maybe good, but the reality is different. I thought gas prices dropping would help a lot, but I have not seen any real change.  We also have seen this play out in rampant distrust of both the state and federal governments. They were the referees who the let "game" get out of hand; a topic for another hub. 
   Trump is the greatest example of this undercurrent.  I'm no Trump supporter, but the anger and pain his followers feel is very real.  I'm sure many Carrier AC employees came to his rallies after hearing their jobs would be moving in 2 years. 
   
   Where's the media during this time of economic pain?  Even Yellen's warnings earlier this month were met w/a yawn.

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   fpherj48posted 7 years ago

   John....I can only speculate like anyone else, but the question arises:  How many times must a person run full force into a brick wall before they begin to be cautious and/or "look ahead!?"
   
   I for one, don't relish the thought of being knocked on my butt again, only to have to scramble, struggle & scrape to crawl out from under.  We all know by now what the definition for "insanity" is~~"Doing the same things over & over yet expecting different results."   This is so true.
   
   For the past few years, I have gone the extra mile to be on my toes where finances are concerned.  I have a fairly good head on my shoulders when it comes to this aspect of living.  There are many ways that individuals do this in their own lives. Personally, I refuse to spend mindlessly or on a whim. I focus on where my money is going, why, when & how. I take the time to think things through & make the right decisions. I'm usually comfortable with this & find I'm further ahead & not suffering in the least. It's conditioning & discipline.
   Even with making conscientious efforts, we still may get clobbered again at some point, BUT, it's plain foolishness not to try.  There's another quote:  " A fool & his money are soon parted."  Peace, Paula

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      Rock_njposted 7 years agoin reply to this

      Good thinking about not spending money mindlessly or on a whim.  Many of us still remember the horrible 08-09 recession.  B

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   dashingscorpioposted 7 years ago

   
   
   The Great Recession was the worst since the 1929 Depression. It was also the longest since the Depression, lasting 18 months. The economy shrank in five quarters, including four quarters in a row.
   Two quarters contracted more than 5%, including Q4 2008 which fell a whopping 8.2%, more than any other recession since the Great Depression.
   I believe the "Great Recession" was such a nightmare for people that they finally took up the recommendation of "saving" that has been bandied about for decades.
   The irony is the economy is at it's most robust when people are spending more money than they are saving!
   Historically the US had experienced recessions on average every four to five years. The economy would get so hot with excess money in circulation that interest rates & inflation would rise and the stock market would plummet with sell offs fearing the economic bubble was about to burst.
   Stricter lending laws have also restrained money from flooding into circulation. We've gone from slam dunk subprime lending to having to prove your income multiple times before getting approval for a home loan along with higher credit score requirements.
   These past 7 years we've only seen 2-3%  on average GDP growth. This has kept interest rates/inflation down as well as abating most nervousness on Wall Street. Historians will probably look back on this era stating the economy was probably at it's most "stable" in history with no major roller coaster cycles.
   Everyone wants a growth spurt but no one wants to let go of {their cash} just in case they get laid off  so they continue to save.
   Most people don't believe they have absolute job security anymore.

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   tamarawilhiteposted 7 years ago

   Look at the U6 employment figures at 62% of adults working, which used to be 67% a decade ago. There is no employment recovery - almost one in ten adults who were working in 2007 are not working now, a trend seen with the massive rise in SSDI though there aren't a lot of people losing legs or their vision.
   And the jobs created don't keep up with population growth, while most of the new jobs created in the past ten years went to legal and illegal immigrants - so employment among native born Americans has declined. When one in ten adults is living at home unemployed, while twice as many are underemployed or working part time, you don't have good consumer spending.

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   jackclee lmposted 7 years ago

   I think the baby boom generation have started to rise by percentage and as people reach that stage of their life, they want to simplify and cut back on non essentials. As they downsize their living space, they also need less stuff. I also see millennials as changing their live style. The new reality is that many young people are carrying large student loan debt and not getting the jobs that hoped for. All this contribute to the low comsumerism of past. IMHO.

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      Rock_njposted 7 years agoin reply to this

      Good observations Jack.  Those are certainly major factors regarding why consumer spending is so anemic.

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