Cross posted on Daily Kos
Mon Dec 19, 2005 at 06:57:04 AM PDT
I thought I was dreaming. One week to Christmas and Costco was a pleasure. I’m not suggesting the place was empty, but I cruised through the aisles like it was a weekday.
Maybe I got lucky, I thought, everyone’s having a big old lazy Sunday American lunch.
Then I read paddykraska’s diary, I Just Got My First Winter Heating Bill.
Nope. paddykraska says it all. Maybe, the beleaguered, debt encumbered American consumer is going to fold. It’s not because they want to fold, they must fold.
Now is crunch time in America. It’s come down to survival.
It’s heating oil or Christmas spending.
It’s prescription medication or Christmas spending.
It’s skyrocketing health insurance premiums or Christmas spending.
It’s unsustainable health care costs or Christmas spending.
It’s college tuition or Christmas spending.
It’s those damn adjustable rate mortgages adjusting up–alot–or spending. Hey, my mortgage payments are going up and the value of my house is going down. They promised me that prices would only go up!
It’s gas or spending.
It’s the reverse wealth effect. Here’s a two sentence lesson on the wealth effect. When there is an asset bubble (housing, this time) people think they are suddenly rich and spend. When the bubble is no more, people realize they’ve been had and stop spending, certainly they cut way back.
Or if you’d like, you can read more about the wealth effect as it relates to the stock market here:
http://www.investopedia.com/...
Maybe the rich will spend, maybe the sales numbers for certain upscale retailers will be good, but what I saw at Costco is bad news for the economy. Keep in mind, consumer spending is 2/3rds of GDP. Bushco has been pushing on strings to keep the American wallet open. They have run out of cards to play.
So,perhaps I wasn’t dreaming yesterday. It may not be such a Merry Christmas for many Americans and many retailers.
Stay tuned. We’ll know soon enough. Oh, if we can trust the government numbers, that is. Ask bonddad about government numbers. Ask bonddad if governments sometimes cook the books.
Or you can read what bonddad has to say here: