Just Tell Me When

OK, here's the "official" line of what's ahead for the largest segment of the economy:

"Bernanke Says U.S. Consumer Spending to Accelerate" (Bloomberg)

Federal Reserve Chairman Ben S. Bernanke said rising wages will probably spur household spending in the next few quarters, even as weak job gains drag down consumer confidence.

While the U.S. has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth,” Bernanke said today in a speech in Charleston, South Carolina.

And here's the reality:

"Suspense in Back-to-School" (Wall Street Journal)

Stores are gearing up for price wars and big discounts to pull in shoppers this back-to-school season, as consumers now look more frugal than when retailers placed orders earlier this year.

The annual splurge on school supplies and fall clothes that runs now through Labor Day is the second most important event for U.S. retailers behind the crucial Christmas season. A clearer picture of how the consumer is holding up will come later this week, when chain stores report their July sales on Thursday.

This year, total back-to-school spending is expected to reach $55.1 billion, up roughly 16% over last year, according to the National Retail Federation, a sharp rebound from a terrible year-ago season. But the increase masks what retailers say is still a very cautious shopper and shifts in what they are buying.

Some of the dollars that previously went to back-to-school wardrobes have been diverted to other categories, particularly electronics. One-stop shopping locales, such as big-box heavyweights Target Corp. and Wal-Mart Stores Inc., are poised to be winners, experts say. Elsewhere, however, necessities are trumping the frivolous.

Parents have stretched their dollars over the last two years and in many cases are in need of basics for their children, said Ellen Davis, vice president of the National Retail Federation.

What's more, strained education budgets across the country are pushing more of the responsibility for school supplies onto families.

"I'll only buy them what's totally necessary at the beginning of school," says Beth Davis, a mother of four who lives outside of Pittsburgh. She plans to wait well into the fall to buy clothing for her kids. The rest of her purchases, she says, will come "when the weather changes."

"As Spending by Wealthy Weakens, So Does Economy" (Associated Press)

Wealthy Americans aren't spending so freely anymore. And the rest of us are feeling the squeeze.

The question is whether the rich will cut back so much as to tip the economy back into recession - or if they will spend at least enough to sustain the recovery.

The answer may not be clear for months. But their cutbacks help explain why the rebound could be stalling. The economy grew at just a 2.4 percent rate in the April-June quarter, the government said Friday, much slower than the 3.7 percent rate for the first quarter.

Economists say overall consumer spending has slowed mainly because the richest 5 percent of Americans - those earning at least $207,000 - are buying less. They account for about 14 percent of total spending. These shoppers have retrenched as their investment values have sunk and home values have languished.

In addition, the most sweeping tax cuts in a generation are due to expire in January, and lawmakers are divided over whether the government can afford to make any of them permanent as the federal budget deficit continues to balloon. President Barack Obama wants to allow the top rates to increase next year for individuals making more than $200,000 and couples making more than $250,000. The wealthy may be keeping some money on the sidelines due to uncertainty over whether or not they will soon face higher taxes.

Just tell me: When are we going to be free of these clueless clowns?

Comments

[roger]

This is part of James Howard Kunstler article.
(This is a structural implosion of markets that have been functionally destroyed by pervasive fraud and swindling in the absence of real productive activity.
The loss of productive activity preceded the fraud and swindling beginning in the 1960s when other nations recovered from the traumas of the world wars and started to out-compete the USA in the production of goods.) he nailed it on the head,for the rest see his blog.
Bernanke the super cheer leader does not come even close.

[sharonsj]

I noticed in Walmart that they devoted a bunch of aisles to school supplies, but the prices were phenomenally low (a notebook for 20 cents). To me this smacks of desperation. Walmart has looked rather empty to me of late (unfortunately I'm there once a week).

TGIF for Monday lunch was less than 1/3 full (and I don't frequent restaurants regularly). Sears was a ghost town. I ended up in Radio Shack, searching for some ridiculously expensive gizmo to attach a DVD recorder to my satellite box. The two employees were talking to a bunch of people about cell phones and blackberries, none of whom bought anything. I was the only buyer and quite pissed at the $40 cost for this dumb piece of Chinese crap plus the two-year warranty to cover the 50-50 possibility it would stop working.

A Chinese worker may get less than a $1 an hour, but you'd never know it from the prices of stuff we have no choice in buying.

[NOTaREALmerican]

Re: Just tell me: When are we going to be free of these clueless clowns?

When the dumbasses stop voting Republicrat (Red or Blue team).

Unfortunately, a society run by sociopaths won’t be self correcting. Let’s assume for a moment that the US Party system is actually (and very simply) a sociopath vetting system. The Party vets local sociopaths judging their ability to manipulate the Party dumbasses with the approved stories (lies: ie, “those people”, “global warming”, “Sarah’s gonna git ya”, “peace n justice”, “Freedom n Democracy”, “Eeee-vil-doers”).

The best sociopaths are granted access to the State Party level, and finally the Federal level.

Perhaps the US peasants are truly unable to differentiate between sociopaths and non-sociopaths. As Party campaigns are nothing but marketing campaigns (a political sociopath is interchangeable with a F-150 truck) then how WOULD the average dumbass tell the difference?

[JJay]

Our economy has been stripped of its' productive capacity and jobs, and to ensure our third world status, open borders and 1 million legal immigrants
a year finish the job.
So, with its' heart and lungs ripped out, our economy only survives with Zero Interest Rates, and even then, just barely.
If and when interest rates rise to normal levels, this economy will implode.

[Rex]

I live on a street in No. Calif. where houses cost between $800,000 and $1.5 mil. Five to 10 years ago, my neighbors would have a new car, or two, every two years or so.
I have noticed, no one has bought a new car on this street in the last 2 years. Everyone is "making do" with their older Mercedes or BMW.

[Small town gal]

I thought that the school supply situation was very odd this year. Last year the prices were very low: if you hit the week or two with the sales, you did very well.

This year, the stores (very cleverly) spread out the sale items over the entire month of July. Things were staggered -- notebooks on sale this week, paper next week, pencils the next week -- so that you had to go back to the store more often. Smart, smart retailers. But it really chafed my butt.

Furthermore, with various school districts in various stages of financial distress, they are foisting more and more supplies off on the kids. Between my three children, the school requested 22 jumbo sized glue sticks. 22. Also, red pens, post it notes, reams of copy paper, and a few other obvious "supplies" that will be used by the teachers rather than the students were included on each list. I don't mind, I suppose: I'd rather get copy paper as cheaply as I can than have three more kids crammed into my children's classes. But it does slowly amp up the pain.

I am spending absolutely no more than I have to. We're making due with the clothes we already have. The sales on school supplies were nowhere near as good as last year, and I'm tapped out.

[roger]

Not only is business very aggressive.banks can also
be dishonest,check your monthly bank statement,you
may find some added charges, as I did. Bite back
and bite hard. Piracy is on the rise!

[Atilla]

OMGOMGOMG Its the end! Why didn't you tell us so we could get ready before! OMGOMG

Oh Bullshit.

Move to Iceland and write for Wikileaks if you are so afraid of the future.

Empires come and they go. Rome took 650 years to fall. America has a couple more generations. Then somebody else will run things. Maybe China, maybe somebody else.

Instead of writing bullshit that glen beck would write write about what can be done to make things better and what is happening that is better. Like Americans are saving like mad. Like stare's rights are coming back. Like local agriculture is coming back. and so on.

Otherwise enjoy Iceland.

[simonp]

I'm going to ask this same question on a number of boards to get a broader answer

There is so much debt that is increasing daily in all of the big developed countries. IT can never be repaid
What would happen if the US, the UK and say Japan all defaulted at the same time, who would lose out ?

[simonp]

Atilla ref your post. I look forward to the great leveller, the US to my mind is a fantastic place to be in business to develop after the big bang, they can go back to making their own things that they do very well rather than buy from other places I see it more as an end to Globalisation it has a lot to answer for, same for industry in the UK we need to get all the youngsters trained up before all the old engineers go to the workshops in the sky

[emma]

You betta go over and have a look at this guys FREE report. He called the crash in 2008 and now look what he says is coming.

http://www.forecastfortomorrow.com/free-newsletter

VERY INTERESTING.