“What we need are consistent job gains, not just a month or two,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, whose confidence forecast was the lowest of those surveyed. “Until we get that, I don’t think we’re going to see any gains in consumer confidence.” — BusinessWeek
Confidence among U.S. consumers sank in June more than forecast as Americans became distressed over the outlook for jobs and incomes.
Stocks plunged as the confidence data, combined with Conference Board figures showing China’s economic outlook improved less than previously estimated, added to concern the global economy is slowing. Unemployment and the turmoil in financial markets precipitated by the European debt crisis raise the risk that household spending will falter.
Some will say that Communist China is the problem. If they let their currency acquire value for their citizens to purchase our manufactured product and create their own domestic consumer society then the world would balance out financially.
There exist more Chinese (1.2 billion or 700 million worker drones) than the 300 million population in the US and they can’t be dependent on keeping 1.5 billion of them servicing the US’ small market. Dumping occurs with slews of cheap product which translates into North American shop-a-holics financing the spending with credit card debt. The end result will be bankruptcy “Made in Communist China” style.
China needs to create social safety nets to encourage its own to go out and spend and create a consumer market that sustains itself and participates ‘fully’ in the world’s economic health by buying from the world. Enough of this B.S. that is destroying us..they don’t need to leech off of our markets when their population is so huge as to sustain its own growth.
Others still will argue that it is not because of China. The American government debt is well over $50,000 per American citizen (unofficially it’s in the 100,000’s per person). Western governments seem to think that it’s acceptable to go into deep debt today, cause inflation tomorrow, then repay the debt in the next decade with inflated dollars. China is using intelligent economic practices and refusing to participate in the western government culture of accumulating massive debt then causing inflation to diminish the debt.
Also, if China rapidly increased the value of its currency it would wipe-out all the savings of its citizens and devalue all the American Treasury bills/bonds that China bought. Instead of the West trying to force China to adopt western monetary practices, it’s time for Westerners to adopt the intelligent eastern practices of less debt and more intelligent governments.
On the same token, the Chinese fixed currency policy is one of the major causes of the current economic dislocation affecting the global economy. The Chinese have to decide if they are part of the world economy or if they are going to shrink back behind the wall. They can’t have it both ways.
In the last growth cycle, the Chinese made more durable goods and sold it to more people around the world. If they were fully integrated in the world economy, that would have lead to an increase in the value of their currency and, subsequently, a decrease in the relative competitiveness of their products; thus shifting some of the production back to where they stole the business from. By artificially keeping their currency low, they are effectively conspiring to wipe out industrial production in other countries.
It may, in the short term, benefit them by creating employment (they have 700 million working age people) and growth domestically, but if they harm the economies of other countries too much they will find themselves without customers for their “stuff” and how will that work?
Oil Spill adds to worries
The biggest declines in confidence were in regions that include Louisiana, Mississippi, Alabama and Florida, the Gulf Coast states that are suffering through the worst oil spill in U.S. history. The April 20 well blowout that destroyed the Deepwater Horizon drilling rig and killed 11 of its crew has polluted beaches and caused job losses along the Gulf Coast. BusinessWeek