“Economists are worried about consumer spending in the months ahead given their forecasts that unemployment, currently at 10 percent, will keep rising until perhaps midyear.”
Obviously the only way sustainable growth can occur in this and all countries is by private growth because government growth is false growth. Government spending tax dollars in an attempt stimulate private growth is inefficient because there’s no way for bureaucrats to know where to spend the money efficiently. The only efficient way is to put the money into the hands of the little people who spend it on (hopefully) necessities first, and then use disposable income for luxuries. This is just basic math and economics, but it appears that economists know better.
The economy will not really get moving with true results until we first stop all the unnecessary low interest rate policies and government intervention where it has now punished all the people who were able to put away money for retirement and now find that they get so little interest that inflation eats up more then 5 times what they get. There is no incentive to save money for retirement and that now has made for a large number of retirees who will now have to live on the government pensions or work well past their retirement age (because in places like Canada, the mandatory retirement age was recently abolished). The low interest policies of bureacrats have been very harmful to that group of people who save and spend responsibly and they have and will pay for this many times over.
Get the interest rates back to 6-8% where they should be (according to many economists) and do not allow them to be lower ever again. If people can not afford to buy homes at that rate then let them rent a place; it is that simple and it is something that reasonable people have to live with when they buy things beyond their means. Indeed, we will now see the stupidity of low interest rates and the fact that knowledgeable people know that thounsands of debtees will be bankrupt as soon as the interest rates go to where they should be is a frightening fact.
USA or any other place with unemployment pushing 10 percent can not claim to be running at full steam until they stop all the quantitative easing measures that were used to falsely cushion people from their own bad planning and frivolous spending. All low interest rate have done is allow these same people to max out their credit cards and home equity to the point that they now can not afford the homes they live in.
December retail sales drop 0.3 percent
Retail sales drop 0.3 percent in December as sales for all of 2009 plunge by record amount
By Martin Crutsinger, AP Economics Writer , On Thursday January 14, 2010
WASHINGTON (AP) — Retail sales fell in December as demand for autos, clothing and appliances all slipped, a disappointing finish to a year in which sales had the largest drop on record.
The weakness in consumer demand highlighted the formidable hurdles facing the economy as it struggles to recover from the deepest recession in seven decades.
The Commerce Department said Thursday that retail sales declined 0.3 percent in December compared with November, much weaker than the 0.5 percent rise that economists had been expecting. Excluding autos, sales dropped by 0.2 percent, also weaker than the 0.3 percent rise analyst had forecast.
For the year, sales fell 6.2 percent, the biggest decline on records that go back to 1992. The only other year that annual sales fell was in 2008, when they slipped by 0.5 percent.
The 0.3 percent decline in December was the first setback since September, when sales had fallen 2 percent. Sales posted strong gains of 1.2 percent in October and 1.8 percent in November, raising hopes that the consumer is starting to mount a comeback.
Consumer spending is considered critical to any sustained economic revival since consumer spending accounts for 70 percent of total economic activity.
The December drop in sales was a surprise given that the nation’s big retailers had reported better-than-expected results last week, reflecting a surge of last-minute holiday shopping. But even with the rebound reported by the nation’s biggest chains, these retailers suffered their worst annual performance in more than four decades in 2008, according to data from the International Council of Shopping Centers.
The 6.2 percent fall in the government’s retail sales figure is only the second decline on records that go back to 1992. In all other years, even during previous recessions, retail sales, which are not adjusted for inflation, have managed to increase.
For December, sales of autos dropped by 0.8 percent following a 1.2 percent rise in November.
Sales at specialty clothing stores fell by 0.6 percent while sales at general merchandise stores, a category that includes big retailers such as Wal-Mart, were down by 0.8 percent while sales at department stores were flat.
You can read the full story at Yahoo News