raising4daughters

Here Comes a Consumer Killer

So how is this a bad thing? The news today seems to be noting good news as bad. Saving rates are finally positive and growing, credit card rates are increasing, and mortgage lenders are (horrors) requiring that the borrower have a down payment and decent job prospects. I've also heard that banks are increasing interest rates on deposits so they can have greater reserves. What a concept? Actually earning interest on your savings account, a concept killed by the Greenspan fed.

I agree with you that these trends will not support a consumer-led buying spree recovery. But, let's face it.....with so many discretionary consumer goods being made in China, the multiplier effect is no longer what it used to be. Consumers no longer have the ability to shop the US out of recession, even with easy credit.

The consumer needs a few years to fix his balance sheet. The feds need to realize this and stop encouraging wasteful spending. Consumer savings should help recapitalize banks (unless that's overwhelmed by their toxic waste CDOs).

Yes, this will be a muted recovery, and the feds need to prime the pump with job creators through accelerated depreciation, investment tax credits, and other policies that will help manufacturers.