The US economy now depends on consumers; never has any economy depended on consumer spending more. Nearly three out of four dollars in the GDP are consumer spending.
Last week, retailers’ sales fell 1%. Consumers would like to spend. But where will they get the money?
Tax receipts are down. August employment numbers showed that jobs are disappearing. And there are 1.3 million real estate agents in the country whose incomes must be falling. Meanwhile, over on the “in” side of the ‘flationary’ battlefield, the forces of rising prices are gaining firepower too.
A report at USA Today tells us that this winter’s heating costs will probably average about 10% more than last year for the typical family.
Commodities will be “skyrocketing,” says our old friend Jim Rogers – because now the world has turned. All those millions of people in Asia, who were willing to work for such low wages, are now becoming consumers.
“Inflation lurking on global horizon,” says a headline in today’s International Herald Tribune. “Globalisation…” says the article, “is clawing back some of the benefits it delivered to Europe and the United Sates over the past decade, and higher prices are an increasingly likely result.”
Yes…dear, dear reader. The world turns…and turns…and turns again. Every time you have the warm sun on your face and the breeze at your back…something happens. The world turns. The next thing you know, the sky is as dark as pitch…and a gale is blowing against you.
The poor subprime nation had it so good for so long. What a pity the world turns. Now, it seems to be at the twilight of a magnificent – if preposterous – era…in which Americans could spend money they didn’t have on things they didn’t need and not have to worry about what happened next. But now we find out. And we find ourselves in the worst possible situation – squeezed between the two prefixes like a skinny word in a fat dictionary. Deflation is taking the oomph out of our economy and the value out of our assets. Inflation, meanwhile, is increasing the cost of everything we buy.
Markets and Money