It actually started earlier this year (you know, when we weren't in a recession), but the economic maelstrom of the past couple of weeks has caused consumers to rethink spending in some very basic ways. Cars sales are dropping like a stone, causing numbers of dealerships to close up shop. Airline traffic is also slowing, as is discretionary spending on items like electronics and even out of home meals.
It wasn't just the financial markets that got spooked in recent days. Trouble is, if consumers keep holding on to their money, it will take that much longer for the economy to rebound. Experts are saying consumer spending for the quarter just ended will shrink, the first time that's happened in nearly two decades. The negative news about the financial markets is being taken to heart across America, and it doesn't bode well for the upcoming holiday season.
Lagging sales has a domino effect. Retailers will start laying people off. Empty tables in restaurants means fewer waiters, busboys, dishwashers, and the like. The economy lost 159,000 jobs last month before all the chaos happened. The current month could be worse. And the $700 billion dollar bailout package just signed into law? It won't help spending in the short term. After all, $1 trillion dollars of household net worth has disappeared in the past four weeks.
Americans are resourceful people. Unlike the banks that got us into this mess, we'll cut our spending, make do with less, and move forward, in the main without the help from Uncle Sam the big boys are getting. Yet if we don't buy, some of us don't work, and businesses that are the life blood of our communities suffer.
Talk about being being between a rock and a hard place.
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How fast can the $ trickle down? It's certainly not fair to expect those on the bottom, a pay check check or two from disaster, to consume. But, we are consuming:food, rent as long as can, fuel,...medicine,health care,..
Let those who can, buy. There's something radically wrong with a society based on consuming/sales. Hey, Angelina Jolie is back in town with Brad Pitt and the kids. Maybe they can do my share of shopping.
PS I don't believe in trickle down, as you know. Bake sales for America,anyone? Naomi Klein has been giving good talks. Scarey,too. Us,regular folks are holding on to our few bucks based on history,yes? It's scarey when you have to ask your bank if checking accounts are covered FDIC (yes,said the bank lady). And I don't know anyone who has need of a raised limit on FDIC on savings, nor anyone near the old limit on accounts.
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