Reich writes: "The last time consumers were this bummed out was October 2011, when there was widespread talk of a double-dip recession."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Why Consumers Are Bummed Out
30 January 13
he Conference Board reported Tuesday that the preliminary January figure for consumer confidence in the United States fell to its lowest level in more than a year.
The last time consumers were this bummed out was October 2011, when there was widespread talk of a double-dip recession.
But this time business news is buoyant. The stock market is bullish. The housing market seems to have rebounded a bit.
So why are consumers so glum?
Because they're deeply worried about their jobs and their incomes - as they have every right to be.
The job situation is still lousy. We'll know more this coming Friday about what happened to jobs in January. But we know over 20 million people are still unemployed or underemployed.
Personal income is in terrible shape. The median wage continues to drop, adjusted for inflation.
Most people can't get readily-available loans because banks are still cautious about lending to anyone without a sterling credit history. (Eliminate student loans and you find Americans aren't borrowing any more than they were a year ago.)
And the payroll tax hike has reduced paychecks for the typical American by about $100 a month. That's just about what the typical family spends to fill up their gas tanks per month. Or half what they spend for groceries each week.
Contrast the current pessimism with consumer sentiment last October. Then, a majority polled by the Conference Board expected their incomes to rise over the next six months.
Now just 14 percent expect their incomes to rise, and 23 percent expect them to fall.
That 9 percent gap of pessimists exceeding optimists is the largest since the spring of 2009 when the Great Recession was almost at its worst.
The stock market is bullish because corporate profits are up, costs are down, the "fiscal cliff" agreement has locked in low taxes for most of the upper-middle class and wealthy, and there's no sign of inflation as far as the eye can see.
But corporate profits can't stay high when American consumers - whose spending is 70 percent of the U.S. economy - are this pessimistic about the future. They're just not going to spend.
American companies won't be able to make up the difference in foreign markets. Europe is careening into a recession. Japan is still in deep trouble. China's growth has slowed.
Profits are the highest share of the U.S. economy on record. Wages are the lowest. But this imbalance can't and won't last.
Investors: beware.
Politicians: Don't do any more deficit reduction. When consumers are this glum, austerity economics is particularly dangerous.
If the next showdowns over the fiscal cliff, government appropriations, and debt ceiling result in more deficit cuts this year, we're in a recession.
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Thanks Mr Reich for keeping this topic in front of us.
Can't blame Bush for that one...OBAMA tax rates are HURTING WORKERS!!!
Why should people not be depressed that Obama is punishing workers and rewarding shirkers?
By buying up assets like real estate they jack that price up for the rest of us. By buying up businesses they deteriorate competition.
When you say fancier TV I see getting rid of an 2000 TV that weights a ton for one that I can pick up by myself. When you say car I see getting rid of a 1998 car that was breaking down all the time for a new one that gives me freedom to move around. When you say computer I see getting rid of a really old slow computer as in 7 years old for a faster one with a bigger monitor that I can see better without straining. Not to mention a new frig that is an energy saver that I watched my bill drop like a rock.
Kool-aid (I've seen many government workers eager for tax cuts since 2001, and teachers who supported more religion in their schools, vouchers, and property tax cuts!) the Democrats are now dependent on the same plutocrats who keep the Republicans flush with campaign cash, and that means timid to token measures to restore a more equitable income distribution and weak gestures toward restoring a truly progressive tax code like we had until 1981 when Reagan started cutting rates to make life even easier on the top 2% and especially for the top 0.1% of Americans! When Reagan took office the top marginal tax rate was still 70% on all income over $400,000.00!
It's not Obama's inability to provide meaningful leadership, it's solely the Republican intransigence and utter lack of concern for America outside of the scumbags who have bought them.
Why can't he do an Executive Order End Run around them on things that are important to ALL of us, not just what's important to HIM?
I only know that where I live, shops, merchants, restaurants and other peripheral businesses like mine, have just had, across the board but with few exceptions, the worst "holiday" season since I opened up seven years ago and there is a lingering sense of stagnation and "wait and see" which looks like running well into the spring.
Let the Wall Streeters eat their own bullshit.
Yet the actual money that I get my check each month has gone up only $35 dollars over the same period of time.
Yet the government statistics each month say inflation is well under control. Well I suppose it is if you are an elected, government official who is making up these statistics.
To bad they get to live in another world than the average, everyday person.
Despite all evidence to the contrary, people believe that they too can be wealthy, and they regard the 1% as being entitled to own most of the wealth in the nation.
"Confiscatory policies" are seen as detrimental to freedom, as if that word means the freedom to acquire most of the nation's resources regardless of the cost to society as a whole.
The United States needs redistribution in a big way. And regarding that word as verboten is accepting income inequality and the deterioration of the United States as the natural, just order of things.
I'm tired of "liberals" answering rightwing assertions that the rich deserve what they have with, "We're not objecting to people getting rich." I certainly do object to people getting "rich," when that wealth is unearned, coming as it does from the labor of others -- which is how almost all wealth is acquired.
A society that exists for the benefit and prosperity of all is a healthy one. The one-sided society in the United States is terminally ill. There's no compromise with a virus. The working class needs to take back from the plutocrats what rightfully belongs to the people.
Redistribution now. Labor Party 2016.
The immigration proposal will legalize 7 million workers and proposes an increase in both high skilled workers and low skilled workers.
This will hurt legal workers at all incomes, but especially those with less education, young workers,and minorities.
The President and many politicians pretend to care about workers, but then propose policies that hurt American workers, while benefiting illegal immigrants and employers who wish an endless supply of cheap labor.
The American people are on to their game and will rise up to defeat this ridiculous brand of "comprehensive immigration reform".
People have been having this conversation forever. We forget sometimes that we are just very wise animals. So, changing the behavior of the alpha humans who control the money is going against every instinct in their being. They will die to protect what they instinctually believe is rightfully theirs.
That is the rub.
So, when you say "Consumer Confidence" the picture that comes to my mind is a large group of lesser humans, waiting to see what the alpha humans are going to do, before they can follow along, just as they have done forever.
There has got to be a better way.
The only thing that I can see that may have brought on this gloom is, as Reich mentions, the return of the social security tax to its previous level which could indeed take a bite out of workers' paychecks, but everyone should have known the rate reduction was temporary anyway.
Otherwise it's been business as usual, which is for the top 1% to screw the other 99%. That isn't about to change.
Then there is this hogwash: "The job situation is still lousy. We'll know more this coming Friday about what happened to jobs in January. But we know over 20 million people are still unemployed or underemployed." WHOA!
Yes, the job situation is lousy. It has been lousy over five years now.
And just what will "this Friday" tell us "about what happened to jobs in January"? We will only know what the bureaucrats say, and what they say is historically and increasingly subject to dramatic revision. For good reason. It is often simply wrong. Besides that, raw numbers do not tell us who stole the economy. Economists might tell us that if they wanted to. When was the last time we read or heard of one who even cared enough to say, "well, it looks like Jamie Dimon at JPM wiped out 30 thousand jobs over the last quarter, and Warren Buffett wiped out another 23,000" and so on?
Exceedingly few economists even care to think this pointedly. Why? because they are, like the bosses they choose, too polite by more than half to all the wrong people.
If none of the outrages committed upon the global & national economies over the last decade are illegal, why is that not because these CEOs own their judges & their regulators? Is this not treason?
You CEO's and supposedly company stockholders need to do an about face by taking lower salaries, profits, channel the difference back to the workers and companies on this soil, and establish what was once a desirable and reliable product line such as many of the products made or assembled here in America used to be. Certainly products of this day and age are inferior to what we consumers used to purchase!
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