October 1, 2010
- A d v e r t i s e m e n t
Now that the Wall Street Journal, New York Times, CNBC, and every other mainstream media outlet have figured out what some financial blogs figured out months ago, everyone knows that American consumers haven’t yet begun to deleverage. Consumer credit outstanding peaked at $2.58 trillion in July 2008. It has plummeted all the way to $2.42 trillion today, a 6% reduction over two years. The full $160 billion reduction can be attributed to write-offs by the Wall Street, Ivy League MBA-run banks.
American consumers don’t want the Age of Mammon to end. They will need to be dragged kicking and screaming into the Age of Austerity. Consumer expenditures peaked at $10.2 trillion in the third quarter of 2008. They reduced spending for two quarters, but when Big Daddy Government handed them billions and told them to spend it on cars, appliances, and homes, they dutifully obeyed. Today, consumer expenditures stand at an all-time high of $10.3 trillion, still accounting for 70.5% of GDP. There really has been no hint of austerity by Americans. It’s a false storyline. The major reductions in consumption still loom in the future.
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