This blog is for discussing issues in our complex global economy.
From the New York Times:
U.S. Consumer Spending Jumps; Jobless Claims Up
This is a great article. It shows a lot of hope. I think that the special programs such as “Cash For Clunkers” that the government are using give the general public great opportunity to make the best out of these tough times, let alone they will help boost the economy. I think that the government needs to offer more programs similar to “cash for clunkers” to continue to help boost the econony.
This article made me really wonder if Wall Street is an accurate meter stick on how the economy is doing. If I remember correctly, while in the past few months stocks went up and down, overall businesses and people involved in here and the stock market were doing average. Some companies went bankrupt or went out of business, but things in the stock market kept going like always. Meanwhile, the country was really feeling the crunch of the recession with no end in sight. People lost jobs, prices went higher for everyday items, and probably lost their homes because of it. Should it really be surprising when Wall Street gets news like this when we’ve all been going through it already? Sometimes it feels like they’re in a different world from the rest of the country. Then again, some of what they do is try to predict the future of the economy and try to act accordingly based on present day analysis.
Are we ever going to recover? Employment is still at a 10% drop. Wall Street is cooling it’s heels, hoping for something dramatic. Everyone is waiting for someone to make the first move. This article points this out all too clearly. We need solid investors, but no one seems ready or able to commit. The more negative the reports, the more negative the response from investors. Our consumer spending is incredibly high for the amount of unemployment and I agree that this is probably just a back lash to small gains in the market. People are using their disposable income which shows they are probably dipping into their savings with hopes that the market will bounce back quickly.
William Cheney, chief economist at John Hancock Financial Services, said at the end of this article, “The normal historical behavior of the economy is, the harder you go down, the faster you come out.” I don’t necessarily think that we have gone down hard yet. We have definitely taken a nose dive at a fast speed (just ask all the unemployed out there) but I don’t feel like this is the worst it is going to get. I believe that in order to slow the decline of the economy, the government should be spending money on the creation of new markets, and not on the ones that aren’t working anymore. Growth isn’t always adding more money to existing money. Growth is sometimes about creating and expanding a good, solid idea’s foundation and in turn will be successful and make money. The “going down hard” is going to come when we realize we quite possibly might have spent all this money on the wrong things and will have to start from ground zero. All these “fixes” seem to be temporary fixes sending the unemployment rates and stock prices plummeting after small increases and moderate leveling. We need a bigger and better plan…and I am not sure who is capable of figuring it out.
My question is, where do we get the truth? Last week on the news they were inspired by the higher numbers on the stock market. And now the stock market usually predicts the future our economic troubles. They concluded and pretty much told their viewers that it’s getting better. But this article showed me otherwise. It’s great to see the small but big changes that we are able to do, Cash for Clunkers seemed to be very beneficial in many different ways. The car dealers associated with it were able to generate some revenue, and we were able to get the polluting clunkers off the road. It’s all very interesting we did it to ourselves, I think the next time I see zero money down on loans I will know and understand what’s coming. But hopefully I won’t have to.
This is a good article, I think that the basis in which the article was written was confusing. The post above me says that the the numbers on the markets predict the future, and if thats the case, the increasing numbers says alot of what is to come. I also agree that consumer spending is high at these jobless rates, lets hope that this spending leads to uprising and less debt for the american people.
The article makes good points. i have noticed that spending is still high for the amount of people who do not have jobs. I wonder if that means that people are now just build up their debt more and more. Hopefully the increase spending will help the economy and maybe in the end create some more new jobs so that more people can work and the spending will go up even more.
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