Americans Off Their Trolleys
The Lonely Trolley
While the jr. admin. from IL and all the kings men are trying to blow sunshine up our skirts, do we really know the truth? Consumer spending was 70% of our GDP. We do not have the capacity, nor did we have the capacity to spend that much cash yearly. We borrowed from our equity and mortgaged much of our lives in an effort to live a lifestyle above our income.
Housing is just one part of the equation. Consider an increase in energy both at home and in the auto. While everyone wants the auto industry to rebound, we need cash to purchase. Our credit line has been cut off. If the auto sector continues to contract so will US jobs. As we learned last week, some of the auto jobs are going overseas to build price competitive “green cars.”
In the meantime we are not spending and we should not be unless we have the cash. Goodbye iPhone, goodbye iPod. Did we really need them?
American consumers
Off their trolleys
May 7th 2009 | WASHINGTON, DC
From The Economist print edition
Consumer spending may have hit bottom, but America’s mountain of debt means the climb back up will be slow and painful
CONFLICTING news this week from California, one of the centres of the housing bust. Just north of Los Angeles, a Texas bank was tearing down a half-built development of luxury houses that had fallen into its hands. With the market for flashy homes dead, the bank reckoned it made more financial sense to destroy them than to complete them.
Farther south, Jeffrey Mezger, boss of KB Home, a well-known LA-based home builder, was calling a bottom to his segment of the housing market. But KB Home’s secret, he said, was to sell custom-built homes that were smaller and cheaper than before, and priced to compete with a flood of cut-rate foreclosure properties. “Homes must change with the times,” he believes.
Whether it is for affordable homes or cheap goods, Americans are peering through the wreckage of the credit crunch and starting to buy again. After falling sharply in the second half of last year, consumer spending rose in the first quarter, and even sales of homes and cars have edged up from deeply depressed levels. Anticipating a rebound, shares of retail companies have soared.
