Could This Be How Americans Are Still Spending Money?
by Mac Slavo: Doomsday
Fear Mongers Get It Right Again: 'The Credit Card Is Maxed†Out.
nowhere near the levels of individual consumer spending1
we saw in the heyday of the real estate and stock bubbles, somehow,
some way, Americans are still able to afford all of the gadgets,
dinners out, and good times of yesteryear.
chart from the Federal Reserve may explain how this is happening.
Its something weve implied over the last couple of years
with anecdotal evidence, but this is proof positive that the consumer
is now down to the wire, trying to maintain some semblance of the
life they led before the greatest depression took hold:
depicts the inflows and in the case of recent years, the
outflows for individual financial assets like personal investment
and savings accounts for the last 60 years.
is perfectly clear: Americans are spending their hard earned savings
at an unprecedented rate.
two years ending September 2010, Americans withdrew a net $311
billion or about 1.4% of their disposable income
from their savings and investment accounts, according to the Federal
Reserve. Thats a sharp divergence from the previous 57 years,
during which they never made a net quarterly withdrawal. Rather,
they added an average of 12% of disposable income to their holdings
of financial assets including bank accounts, money-market
funds, stocks, bonds and other investments each year.
Saving is now
a thing of the past. As Americans continue to live the illusion
(or perhaps, delusion) that the economy is the same today as it
was in 2005, were having to dip into savings to maintain the
lifestyles to which weve all become accustomed.
To be sure,
a good portion of those withdrawals are a direct result of our unofficial
unemployment rate topping 22%, as well as rising costs for essential
goods like food and energy, but some of those savings are likely
making their way into the economy via the purchases of discretionary
and luxury items like consumer electronics, new cars and family
vacations. If a retailer cant provide the credit, what choice
does a consumer have but to hit the money market account to make
sure they can watch the Super Bowl on a new 3D HDTV?
may be faltering, and people
may be going broke and hungry, but some will never give up the
dream until every last penny is spent. After all, America and the
rest of the world couldnt possibly be on
the brink of a catastrophic economic collapse.
As prices for
continue to rise, jobs
remain non-existent and the majority of people hold on to the
idea they can over-consume with reckless abandon, we can expect
that the historical inflows to savings-based accounts will remain
outflows for years to come.
Tom of the
from SHTF Plan.
Slavo [send him mail] is a
small business owner and independent investor.
© 2011 Mac Slavo
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