Personal spending soared 1.3% in August, the biggest monthly leap since 2001, the Commerce Department announced today. Of course, this $129 billion jump in consumption “shows strength in August, indicating some economic improvement,” as CNN writes. A quick look at the chart reveals that the once sober American consumer is starting to fall off the wagon yet again.
Well now, anyone who took my advice on Friday should have had a pleasant weekend, unconcerned about what the G20 leaders would do, which as I figured was just about nothing. They pledged to rig up more regulations that would preserve the place of the money-shuffling class in the world’s power structure, and made a few noises about the United States having somewhat less influence in that power structure going forward. Neither of which was much of a surprise.
President-elect Barack Obama won a historic election on a promise of “change.” James Howard Kunstler says Americans still have no idea just how big this change will be. He says we are heading into a “long emergency”, out of which a new, very different economy will emerge.
The record drop in consumer spending in October is clear evidence of a profound weakening of the US economy. Even President Bush think thinks the situation is bad. At the G20 summit over the weekend, he said it was conceivable that the US “could go into a depression greater than the Great Depression“.
Really. It’s too much. Yesterday, George W. Bush told foreign leaders “Our aim should not be more government, It should be smarter government.” Didn’t Bush just spend the past eight years embodying the exact opposite? Where was the smart part creating an “ownership society” with phony money? Where was the smart part of running up record deficits? Or the war in Iraq?
Barring a massive bounce in the coming weeks, this will be the worst year for stocks since 1937, says Bill Bonner. The greed driving the market has turned to fear. And not the kind of fear that President Bush created about terrorists to push through his agenda. This time we need to be afraid…
Another stimulus check should be coming our way as the market keeps falling.
If it doesn’t happen as one of the final acts of the Bush administration, it will happen as one of the first acts of the Obama one.
The question is, will it help the fast-falling auto industry?
It’ll help retailers. The overwhelming evidence is that the last round of stimulus checks helped pick up consumer spending in the second and third quarters.
But big-ticket retailers like auto dealers play in another sandbox entirely. Unless these checks have a couple of more zero’s than the previous ones, the auto industry’s fate is tied to getting another $25-billion loan package from the government.
The auto industry needs it. And from Obama’s latest statements, it…
This is no ordinary slump, says Bill Bonner. We face a “balance sheet recession”, where banks, businesses and investors are forced to cut back after suffering huge losses. Bill says this will take years to sort out. And government efforts to delay the inevitable will just draw out the ordeal.
When the president of the United States visited this region almost a year ago, the city of Dubai closed down for the entire day. Locals and expats alike jokingly refer to this event of yore as “Bush Day,” a day when they stayed home from work and watched movies as the leader of the “free world” took a Big Bus tour of the city.
For a guy with a Harvard MBA, President Bush simply doesn’t get how real banks work… but anyone who has waited three to five days for an out of state check to clear gets how the “float” works.