Ben Bernanke has the answer. It is all your fault.
Then he said something new: Consumers are depressed beyond reason or expectation.
Oh, sure, there are reasons to be depressed, and the Fed chairman rattled them off: "The persistently high level of unemployment, slow gains in wages for those who remain employed, falling house prices, and debt burdens that remain high."
However, Mr. Bernanke continued, "Even taking into account the many financial pressures that they face, households seem exceptionally cautious."
Consumers, in other words, are behaving as if the economy is even worse than it actually is.
Economic models based on historic patterns of unemployment, wages, debt and housing prices suggest that people should be spending more money. Instead, just as corporations are sitting on their money, households are holding back, too.
In a speech on Friday, Bernanke blamed consumers for not buying enough stuff. Speaking as someone who just threw a whole $47.87 into the local economy at Goodwill, I know he wasn't speaking to me - I'm stimulating my butt off. But he was speaking to you - you are definitely to blame.
Reports suggest that in his next speech, on Thursday, Bernanke will zero in on who is exactly at fault, naming the names of Americans who have not been spending enough. Inside reports note that several regular readers of this blog will be called out publicly including Edson, Michelle, Anna, Stephen and Risa. Bernanke will demand that all named Americans immediately rush out and drop at least $100 at Target and/or Starbucks or be publically flogged. This, of course, seems only fair - don't you know how important the US economy is? Are you actually putting your own well-being ahead of the rest of us? Selfish, selfish, selfish.
Sharon
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I gotta get some hogwire today. Will that make him happy?
I bought some socks this weekend, so there. NEW ones.
Don't look at me, I spent 13.87 at the Goodwill myself last week. And strictly speaking, a lot of that went for stuff I didn't even need. Discretionary spending, baby. I've got SIX items on my grocery list for this week too. So there.
And in order to avoid flogging it must be spent on a publicly traded corporation. None of this farmers market, Goodwill, local economy spending. Everyone knows the only real economy is the stock market.
Actually, looking around here in Oklahoma, where unemployment is closer to 6-7 percent, and the short cans of beans 'n weiners (store brand at Wal-Mart) dropped from 86 cents to 72 cents last month, it might at first glance seem that the economy isn't bad enough to keep people from borrowing and spending.
But the other side of the coin is what to expect from an ineffective Presidential administration that keeps pulling behind-the-scenes dirty tricks and having to retract most of them (although some have 'stuck'). From recess appointments, to canceling the trial of convicted voter intimidaters just before sentencing, to ignoring Congressional subpoenas and Freedom of Information requests, President Obama has created a very turbulent and undependable political climate that keeps tampering with the economic climate.
Just "getting by" until the next shoe drops seems to be the current economic driver. And that won't build science or technology underpinnings for sustained economic growth.
Besides, with all the attacks on wealthy companies and people, the government is deliberately and continually de-motivating many people from making money -- you know, the "growth" part of a growing economy.
It seems Bernanke is whining that the economy he helps hinder and cripple isn't as robust as when he started. Hmm.
@ Nicole,
Sorry, socks are down in the noise. I believe it is men's underwear that is one of the indicators of economic stability. Seriously.
Saturday I bought groceries--$121 and filled up the van with gasoline--$31. I have property taxes coming due on our 4 acres so other spending will have to wait. So if food, gasoline, and property taxes count, I am doing my part to keep the economy going.
To a point, Bernanke is correct. The consumer IS in charge of the economy. Our job is to consume -- but NOT to consume junk that is not made in the USA. The only way that we can stimulate the economy is by demanding that the manufacturing of products that we need start taking place in the US. That will bring back the need for jobs and the machines and buildings to house these products. As long as we support companies that send American jobs overseas by buying their crap, we are guilty!
We have nothing to fee-ah but fee-ah itself.
I just stimulated the hell out of Chase Bank to get my previous house sold. But they never call any more.
Hahahahaha! Thank you for a fine chuckle. May the sun shine brightly for you today.
I am resisting the urge to bang my head against my desk right now...What good are all those tax breaks to big corporations if they keep on sitting on the money and not passing it down to "the little guy?"
ME? I'm doing my part! Why, just last week I replaced my (Japanese made [in China]) camera that disappeared when I was upside down in a whirlpool in my kayak with another (Japanese made [in China]) camera. But now I'm insulted. Just see if I buy anything for anybody during the holidays -- it's blackberry jam for you, and you, and you, kiddos!
Sigh. I'll have to plead guilty. I could have bought more than new tires to replace the ones worn down to the cord, gasoline, and food. Why, I could have bought a wide screen TV! Or a new i-something! But instead, I'm slacking off, growing my own veggies, drying my clothes on a rack, reading library books. The horror of it all. I prostrate before the great god Ben and beg forgiveness.
Consumers, in other words, are behaving as if the economy is even worse than it actually is.
This statement is true provided you are using measures of "the economy" which depend on looking at averages. It is not true if your measures of "the economy" look at medians. Standard example: If Bill Gates were to visit your farm today, then the average net worth of all of the people on your farm would be well over $1 billion. The top 2% or so in this country are doing just fine, thank you, and their spending is boosting all of the average numbers in the economy. The median American is not sharing this prosperity, and their lack of spending reflects this.
A couple of months or so ago there was a survey published which said that only a minority of Americans were confident that, if the need arose, they could raise $2k in cash within 30 days. (There are lots of reasons why one might need to: leaky roof, car repair or replacement, medical bills, etc.) Bernanke is, of course, among that minority. As for the rest, three years ago they could have raised the money by putting it on the Visa or the HELOC, but today the Visa is maxed out and the HELOC is unavailable (either they have been foreclosed upon or they are figuratively underwater). There are no prospects for near-term improvement for people in this category. Their lack of spending is a rational response to this situation.
I love that you blamed Edson.. :) Me -- I'm slacking off, picking up something from freecycle and giving used clothing to a friend. I guess I need to spend my nickles and dimes instead...
As a country, we are now against borrowing in order to spend. Therefore, the average citizen should not spend, since they would have to borrow to do so. Who should spend? How about big business, which has salted away $500B in additional cash reserves since the recession started in 2008... (IOW, beyond what they had before the recession) That's a lot of stimulus waiting to be done - but it doesn't match the profit-motive "ethics" of the corporate beast...
I'm doing my part; along with making my own homegrown tomatillo salsa and tomato sauce these recent weeks, I purchased another full-size violin now that my middle child has graduated to that size. It was even from a local strings workshop. Take that, Bernanke.
@Brad K. - LOL. But, alas, I have no use for men's underwear. I do buy men's socks, though... women's socks keep shrinking in order to cut costs (I think) and I started to fear I'd lose a size 9 1/2 toe to gangrene.
What, I'm not famous enough already? There was that spot on CNN in 1991 when I flew Wolf Blitzer around while I was in flight school, there was the story in the newspaper when the dog almost died from eating chocolate chips a few Christmases ago, the blurb last summer when I cut all my hair off and donated it, and the recent spread on my rabbits. But nooooo, Ben needs to call me on the carpet AGAIN. *sigh*
Me, I shop the Salvation Army store almost every Wednesday. Never get out under $20, either... wool sweaters, down comforters, dresses for the girls. Oh, wait, I did buy underwear for all four children at Target last week! But it wasn't 100 bucks' worth. What about animal feed? I'm sure I dropped that much at the Farmers' Supply today!
But tomorrow, I'm staying home and making more grape jam. So help me, if today's hasn't set up by tomorrow, I'm going to have to open all those jars and reboil it with more pectin, and I'll probably be homicidal by the time it's all through.
I think that Bernanke is saying that consumers should be scolded for being insufficiently organized in order to be paid sufficient wages to meet their economic responsibilities. All for that.
I can't help thinking that consumers are spot on about how bad the economy is.
Bernanke thinks it's all our fault?
A classic case of projection.
And he wonders why he doesn't inspire consumer confidence.
Oh well, Obama loves him and believes he can do wrong.
Which is another reason I don't have much faith in Obama either, but that's for another thread.
In retrospect, it might have been a dumb idea for us to build an economic system that depends upon people buying things they don't really need.
What EricLund said, very true.
I suppose I could submit the fifteen gallons of dried beans from my oversized garden to the Fed's bean counters, would keep them busy for a while. Could also hold off on making blackberry wine and jam this year for Christmas gifts and buy something instead. Nah....
Big thanks to Bernake. He has not insisted on cutting my spending in India unlike others who blamed Indian representatives of you, the above people, for the shooting prices.