Federal Reserve Chairman Ben Bernanke says he is surprised by how cautious consumers have been in the two years since the recession officially ended. But the Fed chief offered no hints of any steps the Fed would take to boost the weak economy.
What COULD it BE????
Fortunately, Mish also provides a list of possibly-significant issues:
- Unemployment rate is 9%
- Real wages are falling
- Income advances go to the wealthy
- Middle class is shrinking
- Jobs hard to find
- Approval ratings of Congress and Obama at record lows
- Consumers have high debt ratios
- Home prices are still falling
- Homeowners are trapped in their homes, unable to refinance
- Boomers need to save for retirement
2 comments:
"Federal Reserve Chairman Ben Bernanke says he is surprised by how cautious consumers have been in the two years since the recession officially ended."
What is Ben talking about?
U.S. household savings rate is currently hovering in the area of 4% and has been since it briefly spiked following the crisis. It was almost zero prior to the crisis. The historic U.S. household saving rate is about 8.
I'm surprised that the American consumer HAS been spending so much. If we revert to the mean, it'll surely put us back into recession.
Those 'rates' kinda depend on whether FRB calculated home equity growth as 'savings,' which many people did. IOW, 'I don't have to save cash: I have equity.'
Not exactly smart, but for 30 years it worked very well.
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