Posted by: jhamon | June 18, 2009

US: Can A 70% Consumer Economy Recover Soon?

By now, it’s widely repeated that the US consumer drives 70% of US GDP.  Why do we care?  Well if consumers aren’t buying McMansions, they aren’t buying plasma TVs and towel bars (remember Linens n’ Things?) and that 70% of GDP will remain anemic.  Well, how bad off is the US consumer?   Hale “Bonddad” Steward examines the facts.

 First, off, the change in US household net worth:

Change in US HH Net Worth
Change in US HH Net Worth

 

Second, if consumers underwater financially, they are likely to reject new offers of easy credit intended to spur consumption of cars and houses.  And the evidence, by the numbers, is that they are:

 

Changes in Credit Market Borrowing Changes in Credit Market Borrowing

It’s hard to see meaningful turn around in the near future.

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Responses

  1. […] structural issues that could decades to resolve.  Meantime, as I have previously posted having lost our collective confidence in debt, we’re all in for a long, slow adjustment to the new normal.  We could well be in for a lost […]


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