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Archive for Saturday, August 13, 2011

Shoppers give economy a boost

August 13, 2011

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— The economy might not be on the brink of another recession after all.

Consumers, who drive most economic growth, spent more on cars, furniture, electronics and other goods in July — and more in May and June than previously thought. That burst of activity is encouraging because it shows many Americans were willing to spend despite high unemployment, scant pay raises, steep gas prices and diminished wealth.

If it keeps up, the economy might rebound after growing at an annual rate of just 0.8 percent in the first half of 2011.

That’s a big if.

Whether Americans remain willing to spend freely despite the stock markets’ wild swings will determine whether the second half of the year is any better than the first. Their 401(k) retirement accounts have shrunk.

A sustained stock-market decline tends to slow consumer spending because it reduces wealth, especially for upper-income Americans. The richest 10 percent of Americans own 80 percent of stocks. And the richest 20 percent drive about 40 percent of consumer spending, analysts say.

That loss of wealth may help explain a report Friday that consumer sentiment hit a 31-year low in August. The Thomson Reuters/University of Michigan’s survey, completed early this week, showed that market turmoil and the political strife over raising the federal debt ceiling rattled consumers.

“The fact that retail sales held up over the last few months ... is a positive economic development,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “However, the true test will be to see if consumer activity held up in the face of recent financial market gyrations and slumping economic confidence. So the August data will be of much greater significance.”

The Dow finished Friday with a gain of 125.71 points, or 1.1 percent, to close at 11,269.02. That means the turbulent week in the end dragged the market down just 1.5 percent after it had plummeted as much as 6.3 percent.

The Dow is still down about 11 percent since July 21.

Worries about the markets and the economy already seem to have caused some shoppers to pull back.

Comments

Richard Heckler 2 years, 8 months ago

The only candidate with backbone that has run in the USA gets turned down.

Why? Because the RINO and democratic party establishment tell voters this person does not represent america. Why do voters listen to the party establishment people who consistently screw up the economy and put americans out of work?

VOTE RALPH NADER who has represented america for 50 years as a brilliant consumer advocate backed by a brilliant legal mind. VOTE RALPH NADER the people's politician.

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Flap Doodle 2 years, 8 months ago

Forget the people's budget. Read the people's cube! The people's cube = much more reality based than anything democracynow plugs. http://thepeoplescube.com/peoples-blog/peoplescube-com-interviews-whiner-and-chief-t7638.html

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Richard Heckler 2 years, 8 months ago

The idea is to somehow create new economic growth. Tax/budget cuts and unemployment pay will never do that long term say like forever.

Let's think a combination of cuts and revenue generators. Jobs are revenue generators.

  1. Establish a major 4 year job program. USA industry does not want to employ americans. Therefore government MUST step up to the plate.

  2. I want my tax dollars putting people to work making money and creating new economic growth. This is a best bang for the tax buck. Put people to work rehabilitating federal highways and older sidewalks throughout the nation. And yes cleaner energy.

  3. Social Security Insurance adds nothing to the debt and seniors are paying for Medicare Insurance. Leave these successful programs alone.

  4. Stop the wars, cut all pork barrel subsidies/earmarks and terminate Bush Tax Cuts.

What is missing? A budget that would have save $4 trillion.

Neither Tea Party neoconservative republicans nor democrats stepped up to the plate

When will democrats learn five things?

  1. Following the economic direction of Tea Party Neoconservative Christian Fundamentalists frustrates the entire planet

  2. That government MUST step up to the plate = establish a major 3 year job program that does not include USA industry and USA banks yet will employ millions upon millions.

  3. I want my tax dollars putting people to work making money and creating new economic growth. This is a best bang for the tax buck. Rehabilitate federal highways, rehab sidewalks in every community = healthy for Americans and bring on clean collar employment.

    1. Retaining Bush tax cuts,not saving $4 trillion and putting forth zero job bills obviously was not the answer.

    2. What was missing from the deal? A budget that would have saved $4 trillion.

Plus Millions of new jobs that would create new economic growth.

The “Peoples Budget” that which does everything this country needs:

* Creates good-paying jobs
* Fully maintains our social safety net
* Invests in education
* Ends our costly wars
* Closes the tax loopholes that have made offshoring jobs profitable
* Ends oil and gas subsidies that pollute our country at taxpayer expense
* Creates a national infrastructure investment bank to help us make intelligent investments for the future

What the “Peoples Budget” does very specifically:

http://cpc.grijalva.house.gov/index.cfm?sectionid=70&sectiontree=5,70

http://www.npr.org/2011/04/15/135435883/the-nation-obama-should-fight-for-peoples-budget

http://www.democracynow.org/2011/4/14/while_obama_touts_compromise_with_gop

http://www.thenation.com/blog/159939/fighting-peoples-budget

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AppologiesMyLiege 2 years, 8 months ago

Jay Carney explains it best:

It is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get... “And... that way, the money goes directly back into the economy, dollar for dollar virtually.” “Every place that money is spent has added business and that creates growth and income for businesses that lead them to decisions about jobs, more hiring. So there are few other ways that can directly put money into the economy than applying unemployment insurance.”

Pass new regulations and tax hikes that make it harder for already stressed small business owners to keep employees, let alone hire news ones; then when the unemployment numbers fail to turn around, ask Congress to borrow more money so they can extend unemployment benefits... because it’s good for the economy and creates jobs.

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thuja 2 years, 8 months ago

Must Go! Must Buy!

Cartman

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Liberty_One 2 years, 8 months ago

"Consumers, who drive most economic growth"

False, right out of the gate.

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