Reader Dan noticed this editorial in the NYT:
Consumer spending has been the powerful and dependable engine of the current economic expansion. Americans have continued to shop through boom-time borrowing, high oil prices, on-and-off job growth, uncontrolled medical costs, rampant trade deficits, hurricanes and war.
Major American retailers reported April sales declines that were among the worst on record. The pain was widespread, including discounters, department stores and specialty shops. Wal-Mart, the nation’s largest retailer, had the steepest decline since it began reporting monthly figures 28 years ago. Government retail figures for April confirmed the slump, showing the first decline in seven months.
When the initial reading on first-quarter economic growth clocked in last month at a weak 1.3 percent, there was a lot of talk about possible upward revisions in the months to come. Since then, news of a worse-than-expected trade imbalance has made a downward revision more likely. That would put economic activity well below the pace that’s needed for jobs and incomes to grow.
If consumers retrenched in earnest, a recession would be all but inevitable. The severity would be anybody’s guess, but two consequences would seem unavoidable. First, a consumer-led recession here could harm other economies as well, because spending by Americans accounts for a stunning 20 percent of the global economy. So far, as the American economy has slowed, the rest of the world has surged. But until last month, the slowdown in the United States was due mainly to the downturn in housing, not in consumer spending.
A recession would be most painful for people who have benefited the least from the current expansion.
And then the NY Times goes nuts. They follow up that last sentence and conclude with:
That fact would force politicians to articulate an economic agenda that breaks with Bush-era policies — on health care, income inequality and social spending.
This is way beyond the old “its a feature, not a bug.” This is one of the key selling points for trickle down econ. As long as you can keep things going for the folks at the top, eventually the folks on the bottom will get, um, trickled upon.