Privatizing Debt Acceptance
Anybody else uncomfortable with the implicit suggestion of this sort of report? The economy is mildly recovering, employment will likely dip a bit more, and:
The problem for the economy is that the expected growth this quarter comes mainly from the auto companies and other manufacturers, which are refilling their depleted stockpiles.
Those inventories had dwindled as factories and retailers sought to bring what they had more in line with reduced sales. Any robust growth in the economy might be short-lived if shoppers don’t step up their spending.
The Providence Journal headline for a shortened version of this AP article was “Fed says recovery depends on spending by consumers.” Many consumers do not have jobs; the prospect of economic contraction has brought many others to a healthy appreciation of the risk that supplementing income with debt entails; and still others are intent on maintaining a cushion against an unpredictable future.
The argument that government and media elites appear to be floating is that the government has maxed out its credit cards (which are backed mainly by political will and public acceptance), and it is now consumers’ turn. Not the least because the same people must ultimately pay both debts, this is simply not the way to revive the economy.
My advice to Americans — as consumers and as workers: Hold on to as much of your money as you possibly can, and whatever you do, put the credit cards away.