Monday, February 8, 2010
Consumer Spending CRASHES!
According to the Commerce Department, consumer spending fell 0.4% in 2009 -- the biggest drop since 1938. Now many of you will say that this is a good sign, because people are saving. And I agree. People are saving, but this necessarily means that the consumer economy must crash. Now, we've all heard about the reports about the 5.6% increase in GDP for the fourth quarter of 2009.
It was basically the result of slower inventory declines. Yes, the government's cash for clunkers and first-time home payer tax credit programs helped, but they were nothing but a costly short term pain reliever. The economy still has cancer and it is my belief that it is terminal.
US consumer spending rises less than expected