On the surface, the latest consumer spending figures suggest that it’s not all doom and gloom out there. In fact, if you take a drive down to your local mall or strip center chances are you’ll see the parking lots full and shoppers filling up their carts with as many useless slave labored imported goods as they can get their hands on. According to economists this is a sign that the economy is bouncing back, and if we could just get more people to do the same thing we should return to booming growth in no time:
Consumers are giving a modest lift to the economy.
They spent more on trucks, electronics and building supplies in October to boost retail sales for the fifth straight month.
The gains provide an encouraging start for the October-December quarter.
“The consumer has to come through this holiday season if we are going to get back to more decent growth rates, and the early readings are those households have hit the stores quite strongly,” said Joel Naroff, chief economist at Naroff Economic Advisors.
A rebound in consumer spending was the key reason why the economy grew at an annual rate of 2.5 percent in the July-September quarter. It was the best quarterly performance in a year.
Economists said the October retail sales data suggest that the economy is growing at roughly the same pace in the final three months of the year. Consumer spending fuels about 70 percent of economic activity.
Stronger growth has helped calm fears that the U.S. economy might be at risk of another recession.
That’s the good news.
But if the global economic crisis is as bad as many of us in alternative media have claimed it to be, how is it possible that people are still able to spend money?
It’s simple really. It has to do with a phenomenon we’ve discussed previously and it’s having a positive impact on consumer spending. While consumers are making less money and unable to acquire meaningful labor, they have yet to realize that the economic paradigm is in the process of a significant shift. As such, they are accessing whatever financial resources they can in the hopes of maintaining the lifestyles to which they have become accustomed over the last couple of decades – lifestyles driven by consumption rather than production. Most have failed to even contemplate the possibility that this is not your average recession and that we may very well be in the middle of an economic collapse that rivals, and likely surpasses, the global Great Depression of the 1930’s.
The bad news is, that while the economy continues to fall into an abyss, the American consumer just doesn’t see it. To compensate for what many believe to be a short-term recessionary blip, consumers are maintaining their lifestyles by blowing through their savings and retirement funds:
More from the AP:
…economists worry that the spending can’t continue at the same pace. Over the summer, consumers spent more while earning less. Many had to dip into their savings to make up the difference.
“Overall, the economy appears to be growing at a decent clip,” said Paul Dales, a senior U.S. economist at Capital Economics.
Still, Dales added, “Consumption cannot grow at a faster rate than incomes indefinitely.“
This trend has developed over the course of the last 18 months, and for the time being, continues unabated. At some point the money will run out, and without job or income growth, consumption will come to a screeching halt. Further compounding the spending crunch to come are the problems in Europe, which is likely headed for a complete economic death spiral, and which will likely lead to serious economic growth problems here in the US. Combined with tensions in the middle east and recently rising energy prices, the cost of essential goods like food and gas may continue rise, adding even more pressure.
People continue to walk down retail aisles with blinders on. Most have no concept of what is happening, while others simply choose to ignore the warning signs. Now is the time to be increasing, not decreasing, savings. Now is the time to be investing in essential goods, not iPads, Xboxes and new cars.
Just as those who made poor decisions leading up to the real estate collapse of 2008 are feeling the pain now, those who have chosen to be consumers instead of savers today will soon be faced with an unprecedented financial upheaval sure to have them wondering why they didn’t see it coming and what they could have done differently.
In the meantime, it’s almost Black Friday and this year retailers have taken the extra step of catering to those who are ready to take on some more credit or dig deeper into their savings by opening their doors after Thanksgiving dinner. Be sure to get your shopping lists together. We’ve heard 3D-Widescreens are going for around $500, so when it hits the fan you’ll be able to experience the collapse of society, food riots, hyperinflation and world war III in your living room just as if you were standing right there in the middle of it all!