Tuesday, August 25, 2009

Consumer Spending

Do we really believe the consumer will start spending in the third quarter of this year?

With the new credit card legislation coming out, a lot of credit card companies are increasing monthly payments, increasing interest rate charges, and reducing credit lines. Add to this increasing unemployment, and it is hard to understand how the consumer will increase their spending. Sure, the $8,000 housing credit and the Cash for Clunkers program will provide a little boost to spending, but that is artificial growth. Not organic growth. With these 2 programs we are paying people to spend money...and you call that a good economy?

Consumers are busy right now paying for things they have already bought! And consumer spending accounts for 2/3 of all economic activity.

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