Thursday, May 8, 2008

Consumers are leaving in droves!

What are we going to do? First we give everyone a tax rebate, then all the market sages say "Save it, don't spend it!", then consumer spending drops. Go figure!

The vast majority of the US populace knows the equivalent of nothing about economics. Any advice that is given to them is going to be followed, at least half the time. Everyone is talking about a recession, high gas prices, mortgage failures, so everyone is buckling down. When it costs more than a year's tuition at Yale to buy gas to go to Walmart, is it any surprise that people aren't spending money?

What I would look for with all this economic goodness is an increase in online spending (correlated with a significant rise in shipping costs) as consumers look for alternative ways to shop.

The larger issue is that we have to come to grips with the fact that this isn't going away. Our dollar is cheap, goods are expensive and life is harder right now. Life on a budget isn't fun and America is finally learning this fact.

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