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People are working on paying off debt and putting together a savings hedge right now. That's a good thing and it could take some time.
Normal spending won't look like it has for the past ten years or even the recent past. It will look a lot closer to that of the 1970's when home prices corelated to salaries. Don't expect a big rebound as we are now just a part of the world economy though we'll still be in the lead for quite a while.
My relatives who have their jobs have still cut back. They don't go out to dinner or shop so much. The kids get what they got but then it wasn't excessive. They are taking a vacation but its shorter and they didn't spend money on other things to make up the difference. They are also staying credit card debt free after the 50k they owed was paid off a few years ago. And saving.
I doubt that they will ever go back to the freely spending times. Nor will others doing the same. Those who have been hard hit will take a long long time before they can, and past that the caution will always be there.
It wasn't those who minded their money and spent within limits who caused the big bubbles. It was those who didn't. Now they are scared and trying to find a way out, and paying it off. There is no reason to expect that once they could spend like they did that they will. I don't think we'll see the over the top flow of money again for a long long time.
I hope so. I am sick of all these zombie corporate workers that talk about all for the company and become the first ones to get laid off.
When I was hired by Fleet Bank, before they merged by BOA, they had a zero tollerance policy. If you made one mistake they would release you. It was a way of saying we have a ace which we can use to get rid of people when the bank needed to cut back on benefits and salaries which may cut into their profits.
Normal spending won't look like it has for the past ten years or even the recent past. It will look a lot closer to that of the 1970's when home prices corelated to salaries. Don't expect a big rebound as we are now just a part of the world economy though we'll still be in the lead for quite a while.
Spot on.
Actually the last 10 years or so wasn't normal spending, it was abnormal in every respect. What people spent oftentimes wasn't descrentionary income but rather borrowed money. Now that people are being forced to live off their incomes alone it's only natural that spending would fall and people would feel less wealthy. Afterall, most people make a meager amount of money anyway.
Now the challenge is how to soak up all that extra capicity that was built into the system based upon people spending money they didn't really have. For example, normally a high saving rate provides the capital base for businesses to borrow and expand. But businesses are already way too big so expanding would be foolsih. Do we really need a Starbucks every 3 blocks? A Walgreens on every other corner? We sure don't need 17 million cars a year. And we don't need a branch bank every 10 feet either. Let alone all the malls and shopping centers that are wasting away. New homes, forget about it.
You get the idea. We built an economy on an unsutainable model. A model that could only work so long as credit was free and easy and it will take many, many years to readjust to the reversion back to normalcy.
For those of us who never used credit, saved money and invested wisely it's no big deal. Hell, I welcome massive deflation. Bring it on, it only makes me more wealthy. But for too many the next decade will very painful as wages continue lower, job opportunities remain muted, and the value of real estate remains under pressure.
And while this isn't the end of the world, it's certainly the end of an era gone bad. And for those whose life style was propped up by leverage, well their world is going to change in a rather significant way.
Actually the last 10 years or so wasn't normal spending, it was abnormal in every respect. What people spent oftentimes wasn't descrentionary income but rather borrowed money. Now that people are being forced to live off their incomes alone it's only natural that spending would fall and people would feel less wealthy. Afterall, most people make a meager amount of money anyway.
Now the challenge is how to soak up all that extra capicity that was built into the system based upon people spending money they didn't really have. For example, normally a high saving rate provides the capital base for businesses to borrow and expand. But businesses are already way too big so expanding would be foolsih. Do we really need a Starbucks every 3 blocks? A Walgreens on every other corner? We sure don't need 17 million cars a year. And we don't need a branch bank every 10 feet either. Let alone all the malls and shopping centers that are wasting away. New homes, forget about it.
Exactly! Things were way out of hand spending wise and people are now hung over from debt but still want to drink deeply so they can buy and buy and buy.
no one except for maybe the extremely wealthy are still in consume mode. I guess
they will do what they have always done throughout history and pick up everthing from
real esate to stocks at deep discounts the rest of us will continue to worry about
job security or loosing our health care. even if you have a good nest egg you should be worried and not spending. You are probably not part of the top 1% of the population who will never feel the effect of a bad economy. Regular americans continue to be used against each other either through race, religion ,polictical party, whatever, to keep us from standing up to the few who benefit from our fighting amongst ourselves.
We didn't have to go down this road, but here we are. I hope we take a different path next time.
Regular americans continue to be used against each other either through race, religion ,polictical party, whatever, to keep us from standing up to the few who benefit from our fighting amongst ourselves.
Very true, especially political parties. The media assists in perpetuating the Left vs. Right positions. Most people are in the middle leaning one way on some issues and another on other issues. This is very much the case with social vs. fiscal beliefs.
The fiscally-conservative democrats and fiscally-conservative republicans are the closest to each other. Both groups have to fight for their positions by acquiescing to their polar bases to gain middle ground. However, it is these polar bases that keep the tug of war for the middle in check. If it sways too far either way the next election cycle will oust the perceived worst offenders (as well as some sacrificial party victims) to achieve balance.
The 2012 election cycle will most likely see a rise in the number of more conservative candidates as many people will feel that the government has intruded too far into their lives.
I thnik that what we see is that the two parties are now furtyher apart then ver really. Obama is getting labeled as anti-business. Not even a bump from the stimulus. It looks like unmeplyment is improvong and altho compnaies have cutback to make profit ;the rest of teh economy is just flat with small movemnts for months. More are saying it will be a very flat recovery how.That looks like what comnaies are preparing for and what people expect from the savings growing.
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