|
Post by unlawflcombatnt on Feb 1, 2007 22:26:03 GMT -6
December's Personal Income report from the BEA again showed Americans spent more than their disposable income. Personal consumption expenditures for December were $67 billion, while Disposable Personal Income was only $50.8 billion. For the 2nd straight year, and only the 2nd time in U.S. history, Personal outlays exceeded Disposable Personal Income. (-Savings Rate.) The 2006 gap of -$92 billion was even larger than 2005's gap of -34.8 billion. Thus, over the last 2 years, Personal consumption expenditures exceeded Disposable Personal Income by a total of $126.8 billion. This can best be seen from the the copy of the table below from the BEA. Personal outlays for 2006 were 1% greater than Disposable Personal Income. For 2005, personal outlays were only 0.4% greater than Disposable Personal Income. The gap between what Americans spend and what they earn is increasing. This is not a sustainable course. Ultimately Americans will have to pay back what they've borrowed in excess of what they've earned. When that day arrives, our economy is going to sink like a rock.
|
|
|
Post by blueneck on Feb 2, 2007 5:23:20 GMT -6
Hmmm, negative savings rates at great depression numbers, home foreclosures at great depression numbers, contracting manufacturing index
How great did the president just say the economy was doing in his speech two days ago???
This is why people are not believing and not giving credit for the so called booming economy - they are seeing the realities, not the spin in their pocket books
|
|
|
Post by LibSlayer on Feb 2, 2007 8:16:39 GMT -6
Hmmm, negative savings rates at great depression numbers, home foreclosures at great depression numbers, contracting manufacturing index How great did the president just say the economy was doing in his speech two days ago??? You haven't said anything that says the economy isn't doing well. Bankruptcies soared in the 90's yet are YOU going to say that meant it wasn't a good economy?
|
|
|
Post by unlawflcombatnt on Feb 3, 2007 14:31:52 GMT -6
Hmmm, negative savings rates at great depression numbers, home foreclosures at great depression numbers, contracting manufacturing index How great did the president just say the economy was doing in his speech two days ago??? You haven't said anything that says the economy isn't doing well. Bankruptcies soared in the 90's yet are YOU going to say that meant it wasn't a good economy? We didn't have a negative savings rate (spending > Disp. Pers Income) during the 90's. In fact, prior to 2005, we hadn't had any years since the Depression where consumers spent more than they earned. Now we've had 2 years in a row. 2 years in a row where the driving force behind our economy (accounting for 70% of our GDP) has been greater than disposable personal income. What we really have is economic pseudo-growth financed by a debt bubble. Most economists agree that this is not a sustainable course. Eventually, this "sea of liquidity" we're swimming in will dry up like the Dead Sea. So will the consumer spending necessary to keep our economy going. All bubbles eventually burst. And the bigger they are, the bigger the explosion.
|
|
|
Post by LibSlayer on Feb 3, 2007 14:50:56 GMT -6
"We didn't have a negative savings rate (spending > Disp. Pers Income) during the 90's.
Of course people have finally wised up that savings is a losers game and are putting more and more into investments. But what does all this have to do with the fact that we had record bankruptcies during the height of the 90's boom?
" Now we've had 2 years in a row. 2 years in a row where the driving force behind our economy (accounting for 70% of our GDP) has been greater than disposable personal income. What we really have is economic pseudo-growth financed by a debt bubble. "
Sounds a lot like the 90's, only this time that expansion is backed by tangible assets, homes, rather than intangible ones, a website trying to sell shoestrings over the internet.
|
|
|
Post by unlawflcombatnt on Feb 3, 2007 16:17:48 GMT -6
"We didn't have a negative savings rate (spending > Disp. Pers Income) during the 90's. Of course people have finally wised up that savings is a losers game and are putting more and more into investments. But what does all this have to do with the fact that we had record bankruptcies during the height of the 90's boom? Whether we had "record bankruptcies" in the 90's has nothing to do with anything to start with. from unlawflcombatnt: " Now we've had 2 years in a row. 2 years in a row where the driving force behind our economy (accounting for 70% of our GDP) has been greater than disposable personal income. What we really have is economic pseudo-growth financed by a debt bubble. " Sounds a lot like the 90's, only this time that expansion is backed by tangible assets, homes, rather than intangible ones, a website trying to sell shoestrings over the internet. No, this "expansion" is backed by the artificial wealth created by overvalued assets, especially homes. That overvaluation is already in decline. With this decline, so goes any "backing" of our expansion. When the overvalued stock market crashed in 2001, it destroyed a large amount of alleged wealth. When the housing bubble deflates completely, it will destroy a much larger amount of alleged wealth. And it will cause a much bigger crash. The stock market bubble was small in comparison to the housing bubble, and it affected a much smaller number of people than the housing bubble. The bursting of the housing bubble, and it's related debt bubble, is going to have a much greater and more far-reaching effect than the tech crash in 2001.
|
|
|
Post by blueneck on Feb 3, 2007 18:57:42 GMT -6
The majority of personal bankrupcies are caused by either catastrophic medical bills or job loss.
There is little incentive to save, when conventional bank savings accounts (passbook, CD etc) are paying low single digit interest, that then gets taxed as income whats left barely keeps up with inflation if not actually falling behind. I remember back in the early 80s when they decided to start taxing savings interest a lot of folks were saying it would be a disincentive.
|
|
|
Post by LibSlayer on Feb 3, 2007 19:01:24 GMT -6
“Whether we had ;record bankruptcies; in the 90's has nothing to do with anything to start with. “
It has as much relevance as the constatant claims of record forclosures.
“No, this "expansion" is backed by the artificial wealth created by overvalued assets, especially homes. That overvaluation is already in decline. With this decline, so goes any "backing" of our expansion. “
Whether they are overvalued by a few % or not is irrelevant they are REAL assets.
“When the housing bubble deflates completely, it will destroy a much larger amount of alleged wealth. And it will cause a much bigger crash. “
It already has.
|
|