Carter Dougherty is reading some briefs from the European Central Bank and learning that they're pretty freaked about the state of the American consumer:
The facts are pretty straightforward. National economies rev up – or not – based on what business spends (known as investment), what households buy (consumption) and what is bought or sold between a country and the rest of the world.The American household was the rock in all this.In recessions since 1945, private consumption has typically fallen only 0.4 percent in a single quarter before rebounding to pre-recession levels within two quarters. All this even as exports and business investment waned.In this downturn, American consumers, burdened by heavy debts, are still no longer spending what they once were. Consumption fell 1.6 percent between the onset of recession at the end of 2007 and the fourth quarter of 2008. And the decline is not over.
Worrying about what the next growth period will look like is a bit like worrying about rehabilitation while the patient is still facing a dangerous surgery: It's not worth our attention in the short-term but might prove all that matters in the long-term. Recent growth periods have been sustained atop consumer spending which was in turn resting on consumer debt. That's over. Most economists are pretty sure we'll grow again, and fairly soon in the scheme of things. But that growth may prove a lot more anemic than we're used to. For an optimistic take, however, read your Robert Frank.
