Both my mother and I work in retail and noted how this year's Christmas crowds didn't seem quite so bad as in years past, from both the shopper and the employee points of view. The "numbers" from December have come out and things aren't looking too good: retail sales went down .4% last month, and though I would not go so far as the source to call that a "plunge," it's significant that the Christmas season had a decrease in spending. The housing market crisis, unemployment, and the "credit crunch" (to be honest, I still don't know exactly what that is), are keeping people from spending. I live in Maine, and the cost of heating oil is weighing heavily on people's minds and wallets as well. Economically it was the worst Christmas in five years.
Consumers account for two-thirds of economic activity, and they're not shopping. Analysts are saying that we're headed for a recession, if we're not in one already. Inventories are rising--people aren't buying goods in stores--which could lead to production cutbacks and even greater unemployment. Manufacturing activity is also at its lowest point in five years.
Generally I am a bit anti-consumerism. I hate that we buy what we don't need, throw away what we no longer want, fill emotional voids with material things, etc. etc. Yet I also don't want to see people without jobs. I have no idea if spending a bit more instead of saving (as I've always been a "saver") would be doing my part to help the economy or not. I'm no economist; scroll down to the comments of my November 3rd entry, "My Worthless Dollar" to read what some people who know what they're talking about have to say. I'm certainly not suggesting we spend more than we can, since I think living beyond our means is what got us into this mess in the first place. Obviously economies have high points and low points, rotating through them as if on fortune's wheel, and we're at a low point--enter de casibus tragedy. I'm just worried about how American workers, and those abroad dependent on our economy, are going to suffer.
Source: Crutsinger, Martin. "Consumer spending weakens." The Associated Press. Bangor Daily News. January 16, 2008. Online version available at http://www.signonsandiego.com/news/business/20080115-1444-economy.html
Yes that's how you get out of a recession, spend. And those holiday numbers are far worse than you think. Most retail stores rely on huge holiday sales just to scrape by for the rest of the year. A bad holiday season actually means a bad next year. Mark my words every company that a bad christmas season will have a worse 2008.
"They lie about marijuana. Tell you pot-smoking makes you unmotivated. Lie! When you're high, you can do everything you normally do, just as well. You just realize that it's not worth the fucking effort. There is a difference." Bill Hicks
Recessions aren't completely bad; after all, they do purge weak, unsustainable firms that have been largely propped up by The Fed's decision to continuously lower the Fed Funds Rate (this causes an expansion in the money supply). If I was on the OMC, I'd jack up the FFR (contract the money supply), tell Bush and Congress (they become very docile in Bernanke's present) to raise rates on top income earners (they have a higher MPS which expands the money supply) and cut the rates on low income earners (they have a higher MPC), for the short term. Then you could kill two birds with one stone. A recession is most likely going to happen; that's not really the main issue. It's all about how deep and prolonged of one do you want.
"Harder than ya'll cause I'm smarter than ya'll
I know that deep down it's got to be bothering ya'll
Pay attention, watch fly gon get larger than ya'll
Put your pride on the rocks, make you swallow it all"
Care to put any of that into laymans' speak?
--------
ce.apocryphalpublishing.com
It's the fault of The Fed. : )
"Harder than ya'll cause I'm smarter than ya'll
I know that deep down it's got to be bothering ya'll
Pay attention, watch fly gon get larger than ya'll
Put your pride on the rocks, make you swallow it all"
Rest in peace
yourfuneralguy
http://www.lowercostfuneral.com
The fed and Congress can pump more money out and even give us checks at tax time etc. They will do this. But Alas this will not solve the problem....and only delay the pain for a short time. Housing will crash even harder. Temporary liquidity only delays the pain.
This was done before th dotcom bomb, and many times since World War 2.
Rest in peace,
Your Funeral Guy.
Thank you, someone else who doesn't believe that throwing money at the problem will work. or do you?
Rest in peace
yourfuneralguy
http://www.lowercostfuneral.com
I am of the opinion that throwing money at these problems has never worked.
Case in point: Housing has never had a soft landing. Greenspan, Bermanke, and Bush will eventually give account for their actions....Throwing money at economic problems may and often delay the pain.....but historically i think it makes the problem worse. Temporary measures can appear to help temporarily. There will be economic aide to us working stiffs at tax time this year...but it will not BE LASTING HELP.
There is also an almost obvious Military buildup recession thing.
Vietnam was followed by recession.
Reagan's Military buildup was followed by recession.
Gulf War 1 was followed by recession
There was going to be a recession as a result of Iraq...Our leaders knew it going in.
REST IN PEACE
Your Funeral Guy
Indeed. War always brings an economy out of a depression or recession. However when inflation is weakening your monetary worth and it is build up by war, when the war ends I forsee a crash.
This war put us into a recession after we had a surplus. Funny thing happens when you eithe don't raise taxes while fighting a war or don't demand vastly different lifestyles from the people while fighting a war...you go into moutainloads of debt.
"They lie about marijuana. Tell you pot-smoking makes you unmotivated. Lie! When you're high, you can do everything you normally do, just as well. You just realize that it's not worth the fucking effort. There is a difference." Bill Hicks
Good point. However I am speaking from a purely Austrian and Chicago Economics school theory. They Keyneysian Theory which we are using with this recession will further weaken our money and put us farther into debt.
Now, a war will take a country out of a recession, but I don't think anyone has ever seen a country go to war while on the upswing. This give one more good reason to not fight so much, at least for the republicans who love to slash taxes. And the good reason to not fight for the democrats is because they like to have their personal freedoms, so they do not like being told to change their lifestyles. I like to have a free market economy with my freedom intact, makes me an anarcho-capitalist or Juris Naturalist.
We've been in debt since the government decided that the bigger it is the better. If we had a smaller government we wouldn't have this problem. Makes the income tax look ridiculous when it supposedly will help out debt...bullshit, lol. But by printing more money to throw at the economy, we also weaken the dollar and rack up more debt. That's what happens when you try to control the economy, which is more like a force of nature...you can't control it like you can control the government.
The word is Bernanke and the rest of the OMC are going to cut 125 base points off the FFR by June with the first (a 25 point cut) coming at their next meeting. That'll put the rate below three percent; the inflation rate will top out above six for a bit.
"Harder than ya'll cause I'm smarter than ya'll
I know that deep down it's got to be bothering ya'll
Pay attention, watch fly gon get larger than ya'll
Put your pride on the rocks, make you swallow it all"