July 12, 2009 in Letters

No recovery in sight

The Spokesman-Review
 

There isn’t going to be a “recovery.” A recovery would mean that the economy would go back to the status quo before the great recession started. Can’t happen.

People are saving instead of consuming now, and that is a good thing. U.S. citizens have been saving less than those in all the other industrial societies because they are punished for saving. Now people are giving the banks cheap money out of fear. Most of the banks are paying 0.5 percent or less in interest for savings and lending at 5 percent or more. Try 15 to 20 percent on credit cards.

But saving means less spending on “stuff” that fills all those impressive storage complexes. Consumption is about 70 percent of our gross domestic product, but fewer people will be piling up debt to buy more stuff when there are 26 million unemployed or underemployed. For some reason people without a job or without a home are not big spenders. U.S. households have lost more than $14 trillion since the great recession started.

Combine all this with the trillions of dollars of debt that the government and the Federal Reserve are running up and the world looks scary. Consumption won’t save us.

Bart Haggin

Spokane


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