Wikinvest Wire

Our consumer economy

Friday, October 31, 2008

The pitfalls of an American economy that is so heavily dependent on personal consumption for growth is shown in graphic form below - without the consumer, it's slow going.
IMAGEThe 2008 recession is shown as having started earlier this year, however, this is just my best guess - the "official" beginning has not yet been determined by the National Bureau of Economic Research.

Also note that the spike in late-2001 was a snap-back surge after spending slowed sharply immediately after the terrorist attacks. Finally, note that spending never plunged to current levels during the 2001 recession which is often referred to as a "business-led" recession.

2 comments:

AJ said...

The existence of a middle class with disposable income provides economies of scale, which lower prices for everyone. If the middle class evaporates, the number of consumers in the market will go down, the scale of economies will decrease, and the final price of goods will shoot up to compensate.

The wealthy might do well to understand their symbiotic need for the middle class, or the standard of living for ALL Americans rich and poor will tank.

http://aquiettruth.blogspot.com/2008/10/disappearing-economies-of-scale.html

Anonymous said...

Great commenting. Great article. In my blog I am wondering how the short term economy will affect the consumer.

Take a look if you are interested
Consumer Economy

thanks for writing
Mike

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