NY Times: Consumers Are Saving More and Spending Less

Consumers Saving More Than Thought


By CATHERINE RAMPELL
Published: August 3, 2010
Consumer Spending Stagnates in June (August 4, 2010)

Economix Blog: G.D.P. Probably Worse Than Reported (August 3, 2010) A new government report released on Tuesday showed that consumers saved 6.4 percent of their after-tax income in June, and that this savings rate had shot up as high as 8.2 percent in May 2009. Before the recession, the rate had hovered at 1 to 2 percent for many years.
The questions now are whether America’s newfound love affair with frugality will continue and whether families’ reluctance to spend will hold back economic growth.
In earlier reports, the government had estimated that families had not changed their spending patterns much in the last few years, despite the economic tumult.
As a result, many economists had worried that a big shock might be coming soon, when consumers finally faced the music and began the painful process of reducing their debt. So on the one hand, the fact that consumers really have been saving could be taken as very good news.
“The optimistic view is that this means consumers have built up a bit more of a cushion than we thought,” said Nigel Gault, chief United States economist at IHS Global Insight. “If they’re in better financial shape than thought, then maybe they could spend a little bit more freely going forward.”
That is not likely to happen anytime soon, though, he said. “It’s difficult to see consumer spending doing a lot better until we see more job growth,” Mr. Gault said.
Many other economists agree.
Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Monday that Americans would start spending once they got a healthy increase in their wages or salaries. But it is not clear when that will actually happen.
Private payrolls have shown slow growth all year, and economists are forecasting that the jobs report for July, to be released on Friday, will be similarly disappointing.
“There are signs that hiring will pick up, as growth continues and as companies become more confident,” said John Ryding, chief economist at RDQ Economics. “Still, I don’t think it’s going to be an incredibly robust pickup that’s big enough to bring unemployment down sharply and put consumers’ minds at ease.”
Along with high unemployment, high debt levels continue to discourage consumer spending. American households, though borrowing less, still are paying for their free-spending ways in the credit bubble of the mid-2000s. Their debt levels are far higher than they were in the 1980s and 1990s, when they had less than a dollar of debt for every dollar in disposable income.
At the peak of the housing boom, consumers’ liabilities rose above 130 percent of their disposable income. That ratio has been falling ever since the financial crisis, and for the last year has averaged in the mid-120s, according to the Federal Reserve.
“Whatever happens with incomes, deleveraging is still the biggest constraint on spending,” said Ian Shepherdson, chief United States economist at High Frequency Economics. But he said “nobody knows where what the final stopping point for the household leverage rate is.”
Given the June spending data and reports of tumbling consumer confidence in July, many economists say a best case for consumer spending would be an annualized growth rate of 2 to 2.5 percent for the rest of this year. Spending rose at a rate of 1.6 percent in the second quarter and 1.9 percent in the first quarter.
“That’s better, but it’s still not the 4 percent growth we used to see back when the U.S. consumer was considered the engine of global growth,” said Paul Ashworth, senior United States economist at Capital Economics.
Source

Celebrating 30 Years!

I Will Be Here by Michael W Smith

When you feel the sunlight fade into the cold night
Don't know where to turn
Don't know where to turn
And all the dreams you are dreaming seem to lose their meaning
Let me in your world
Baby let me in your world
All you need is someone who you can hold
Don't be sad, you are not alone
Chorus
I will be here for you
Somewhere in the night
Somewhere in the night
I'll shine a light for you
Somewhere in the night
I'll be standing by
I will be here for you
In this world of strangers
Of cold unfriendly faces
Someone you can trust
Oh there's someone you can trust

I'll be your shelter
I'll give you my shoulder
Reach out for my love
Baby reach out for my love
Call out my name and my heart will hear
I'll be there
There is nothing to fear

Wedding Weekend!

My little brother is getting married this weekend!

Romans 12: 9-21:
Love must be sincere. Hate what is evil; cling to what is good. Be devoted to one another in brotherly love. Honor one another above yourselves. Never be lacking in zeal, but keep your spiritual fervor, serving the Lord. Be joyful in hope, patient in affliction, faithful in prayer. Share with God's people who are in need. Practice hospitality. Bless those who persecute you; bless and do not curse. Rejoice with those who rejoice; mourn with those who mourn. Live in harmony with one another. Do not be proud, but be willing to associate with people of low position. Do not be conceited.

Do not repay anyone evil for evil. Be careful to do what is right in the eyes of everybody. If it is possible, as far as it depends on you, live at peace with everyone. Do not take revenge, my friends, but leave room for God's wrath, for it is written: "It is mine to avenge; I will repay," says the Lord. On the contrary:

"If your enemy is hungry, feed him; if he is thirsty, give him something to drink. In doing this, you will heap burning coals on his head."

Do not be overcome by evil, but overcome evil with good.

And over all these virtues put on love, which binds them all together in perfect unity.
Collosians 3:14

Vacation Fun!

Last week, I took a few vacation days.  I realized a few weeks ago that I don't have many real crafty skills.  I love to scrapbook but that's really all I'm really confident with.  My Grandma was in town this week for my brother's fiance's shower, so I decided that I would ask her to teach to me how to do something.  She gave me some private lessons on blanket making on Wednesday.  Crotcheting is a lot harder than it looks.  Wednesday night was my brother's fiance's Bridal Shower.  That was pretty fun.  Eleven days and counting and little brother will be married.

On Thursday and Friday, I drove back over to my parents house for another crotcheting lesson and some more practice.  I started my project but I'm not far on it yet.  I had all day to work on it and practice some more.  It's pretty exciting that I'm actually creating something. I hope it turns out really good.  Thursday and Friday night, I had to work at Sears.

Saturday and Sunday, Steve and I requested off from Sears because we were going to go camping with his brother but those plans fell through.  Steve found out this week that one of friends from back in Lima passed away last week, so on Saturday we drove three hours to Lima and spent a few hours there and then drove three hours back home.  We did stop at the Elkhart County fair on the way home, so that was fun. 

On Sunday since we had the day off, we went to church then we went to Potato Creek for some relaxation.  We went Paddle Boating on the lake for about an hour and a half.  It was so peaceful just relaxing out on the lake.  I had forgotten how much I loved Potato Creek.  It was Steve's first time there. I think he enjoyed the experience.  I love that Sears has been giving me Sundays off lately.  Having Sundays off gives us an actual day off from both jobs, so we have time to do fun things like go to the fair or go boating at Potato Creek.  It's also a good day to destress from the week and catch up on cleaning the house.

My Grandma lent us the book The Shack this week and I loved it.  The imagery in just made the pictures jump out of the book.  It starts with such a heart-breaking story, but it ends as a story of hope.  Even in our deepest hurts when we are angry with God it does not mean that God has left us.  God does not cause hurts, but sometimes he uses them.

"Forgiveness is not about forgetting. It is about letting go of another person's throat......Forgiveness does not create a relationship. Unless people speak the truth about what they have done and change their mind and behavior, a relationship of trust is not possible. When you forgive someone you certainly release them from judgment, but without true change, no real relationship can be established.........Forgiveness in no way requires that you trust the one you forgive. But should they finally confess and repent, you will discover a miracle in your own heart that allows you to reach out and begin to build between you a bridge of reconciliation.........Forgiveness does not excuse anything.........You may have to declare your forgiveness a hundred times the first day and the second day, but the third day will be less and each day after, until one day you will realize that you have forgiven completely. And then one day you will pray for his wholeness......"

— William P. Young (The Shack)