The The WSJ gives us this quote:
To be sure, there was a glimmer of positive economic news this week as well, as the Labor Department released figures showing inflation-adjusted consumer spending inched up slightly in November as gas prices fell steeply. The personal savings rate also climbed in November. Socking away more in the bank leaves less for splurging at the mall.
Our own Ken Houghton brought us Tom Toles take on the consumers role in helping the economy. (Yes, the wording is correct, but that is for another post).
What does the information reveal?
1. Finally savings are increasing a bit, which is necessary for capital formation (for us citizens) but offers no short term stimulus.
2. Personal disposable income has dropped in relation to spending, such as lay offs or pending layoffs, less work hours/week now or in the near future.
3. Spending is less because people are paying off debt a bit more instead of charging (or using their cards less and cash more, or buying gold or swiss francs).
4. One can always add a ‘fear’ factor as a rational consumer and banker emotion to instability, but begs the question of “where is the money?” Of course, what does the fact of increasing personal and commercial bankruptcies add to the issue?
Since I have no clear vision of weathering this storm, can we build one?