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PeakTrader said...

Will a virtuous cycle of consumption-employment take hold (where consumption generates employment and employment generates consumption), or will consumers maintain autonomous consumption (or 1% real final sales growth)?:

What recession? Shoppers eat up Black Friday deals
November 26, 2010
USA Today

Research firm ShopperTrak is expected to release Black Friday data on Saturday, but a full picture of how retailers fared for the overall weekend won't be known until Thursday when major retailers report their monthly sales results.

Black Friday is generally not as big for online retailers as Monday after Thanksgiving -- known as Cyber Monday -- but many were already off to a good start. By mid-afternoon Friday, eBags sales soared 69.5 percent compared with a year ago.

For the economy, the question remains: Will shoppers keep it up?

Nearly 15 million people remain unemployed, and concerns about job security cloud consumer confidence. Spending is picking up but has not returned to pre-recession levels.

The National Retail Federation predicts this holiday season's spending will improve 2.3 percent over last year.

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PeakTrader said...

Government has been competent shifting blame from itself to Wall Street and Main Street.

Americans overconsume less than many believe. When a U.S. multinational basically offshores a factory, that production isn't counted in GDP (if the factory was producing in the U.S. instead of a poor country, it would add rather than subtract from GDP). However, U.S. consumption from that factory shows up as imports or overconsumption.

Also, Americans tend to live month-to-month. When prices and interest rates fall (for goods & services, mortgages, etc.), they can consume more.

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VangelV said...

The problem is still too much consumer debt given where Americans are with respect to the demographics curve. We now see even retired people that have mortgages and many upper middle class families without the funds necessary to send their kids to college. This has been a problem created by the rational response of economically illiterate individuals to the false signals created by the Federal Reserve. Such responses can never be good for individuals or for society.

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PeakTrader said...

VangelV, how do you know it's too much debt rather than too little income or too much unemployment?

Do you also believe Americans have too many assets and goods?

Taxes may be too high, wages may be too low, and there may be too few jobs.

Or, perhaps, most Americans will collect too little Social Security and receive too little health care, given the taxes they and their employers paid.

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Bernanke is doing a great job, except for the recession in 2007 and the deeper recession in 2008.