Lower Retail Sales, Employment Figures a Grim Sign for US Economy

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.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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3 Comments on "Lower Retail Sales, Employment Figures a Grim Sign for US Economy"

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The sad part is that consuming doesn’t produce anything, so trying to drive consumption to save the economy is “putting the horse before the cart” as Murray Rothbard put it when describing the Great Depression. I suppose that if any more than .002% of people had an inkling of a clue about economic theory, they’d realize that higher consumption ultimately leads to the need for higher taxes. Saving and investing is highly underrated.

Peter Davis
I completely agree with the previous poster. Those that argue that the Fed need only lower rates to save the economy are missing the boat; I even heard the “wonderful” Jim Cramer claim that rate reductions will save the real estate market. Think again, Jim. I personally believe that the problem is much deeper. Simply put, the level of consumer debt in this country is untenable and cannot sustain itself forever. Arguing that the Fed can save the day is like telling a drug addict the best way to kick the habit is by taking more drugs. It is unfortunate… Read more »

Everyone wants to earn more money, get a better job, increase their income. The economic climate may be bad but it’s definitley still possible to achieve this in a job, especially with IT jobs. IT Training isn’t necessarily the only answer. There are other ways to study and learn new technology to help you make the big money. Job opportunites will be there and reading the right ebooks will help.


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