Wednesday, August 6, 2008

A changing world

Even in this century's darkest days of recession and war, U.S. households kept on spending. But one of the smartest investors on the planet says the American consumer is finally out of steam.

Question: Economists have been predicting the demise of consumer spending for years. Why should we believe it this time?

Answer: Because there are very few shock absorbers left for U.S. consumers. They are facing a credit crunch, a sharp slow-down in the economy that has triggered higher unemployment, and price shocks in energy and in food. On top of that, they can no longer use their houses as ATMs.

Article

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