BookbagNinja

@chili_dog: Not sure when you cut back on spending, but I started pulling in the reins a bit a little over a year ago and I was already living well within my means back then (minimum 30-40% of earnings going into savings). As prices have gone up, I've found myself cutting back. Some of my work comes from the entertainment industry, so I figured I'd see fewer hours from that. Haven't seen it drop off quite yet, but I am seeing the # of tickets sold to events dropping. I'm also anticipating lower returns on my investments as interest rates drop and the stock market becomes increasingly volatile.

FLConsumer

For some reason people still think you can't get rid of credit card debt, which I attribute to the good propaganda of the credit card lenders. Credit card debt is the EASIEST debt to discharge, since every judge and trustee knows exactly how horrendous the interest can become.

julienne

fairweather

I wonder why many still fail to see that the Federal Reserve little screw the country over in national debt is also part of the problem.

Daryl26

Yes, it certainly may happen that you are hit with horrific expenses in our grossly cost-inflated healthcare system, but that's not a reason NOT to save and try to live within your means.

I know people who make less than I do who live in bigger/more expensive houses, drive more expensive cars, have big shiny flat-panel TVs and have kids to support. I already feel like I'm not saving enough toward my eventual (hoped-for!) retirement. We live in an age of consumerism that's not good, and it's not because too few people have health insurance. Hell, if the people without health insurance thought for a minute about the risk they're taking, they'd save MORE. I'm sure some do, or at least try, but there's a big chunk of our population who owe more than the car they're filling up (on credit) is worth, and are already thinking about buying another one. They're financing the family trip to Disney on credit, buying a new computer every year when they've gunked up the old one too much with spyware and ordering crap off Home Shopping while they wait for pizza to be delivered.

BOTH THINGS ARE BIG PROBLEMS. I haven't read any comments suggesting that people can pay monstrous, unplanned healthcare costs off by doing a little economizing, so where'd this idiotic strawman come from? Quote me someone writing about that and I'll concede the point, but it sounds like yelling about one problem to distract from another.

GearheadGeek

smitty1123

Everytime I see a talking head on the news I just want to punch him in the mouth. I went to college to earn a better wage and provide for my family... What do I have to show for it? Student loan debt and the guy next to me with no college makes the same cash (he has experience as he worked his way up while I read about it) so he doesnt have loan debt.

Part of my anger is based on the fact that in 1988 40-50,000 was considered pretty good income. In 2008 its not when all things are factored in... And we have these talking heads saying gas costs the same now as it did in 1980 'inflation adjusted' NO IT DOES NOT!

V

vdragonmpc

chilled

chili_dog

Where is my money and when can I spend it on something I want? Its all been hoovered! I make pretty good money but after all of the things mentioned I barely get to keep a fraction.
THATS WHY SPENDING IS DOWN!

vdragonmpc

The federal government, looking at billions of $ in Social Security obligations over the coming decades, changed the inflation rate. No, not by any market action, by simply changing how its calculated. This was done to save the Government billions in benefits that it would otherwise be obligated to pay.

Essentially,its like someone hacking a bathroom scale and claiming to lose weight.

The calculations from several economists are that the real inflation rate is at 6%.

This means that since benefits and payouts ( such as wage and benefit contracts,pension and Social Security benefits that are adjusted for inflation) are being paid at 3% while costs and prices are rising at 6%.

Don't even talk about the disaster scenarios for bond market and bank interest rate payouts.
Heres the day to day consequences: If your income is paid off a 3% interest rate and your expenses (gas,food,rent and other bills ) are at at 6%,you need to do something to match the gap. Keep in mind your income is actually worth 6% less than what the check says due to this inflation . So what do you do to bridge the gap?

Hello, debt.
So now people have to finance their bills on the Amex to stay ahead.But what happens when the Amex and the Home Equity Loan are tapped, and the mortgage is due?

At least people with Lexuses (lexi?) and diamond necklases have something to sell.What happens to the single mother paying the rent on her Mastercard?

Heres the graph and article that illustrates the damage
[www.autodogmatic.com]

,

Silversmok3

I do think though that we've generally been living beyond our means for the past several years thanks to the ease of finding available credit and worrying about the bills later. I did the same thing myself - see the debt mentioned above. Now it's coming back to bite us and people are shocked that confidence in the economy is falling. It's just hitting harder than before due to the higher gas prices and general CoL.

sljgold

And no, I'm not having trouble paying my bills. I don't buy anything, so I guess I am contributing to the coming recession.

But there is a tipping point. We may have reached it. People aren't going to be able to afford double digit increases in gas prices, medical insurance, home heating etc on stagnant salaries when their over-inflated homes lose value.

Time to come up with a new economic plan that doesn't rely on the purchase of cheap crap.

MsClear

Crumbles

An overweight, somewhat frumpy, person (could've been a man or woman) getting into her SUV, almost completely surrounded by other SUV's (I can spot only one car in the foreground), with a cart full of stuff.

God Bless America!

ARP

deadlizard

Mariajl

I am proud to be among those who has cut back (permanently, I hope) on spending. We have actually been getting *rid* of stuff via eBay, Craigslist, Freecyle, and other forms of donation and disposal. We moved to a much smaller house and enjoy the freedom of fewer possessions and luxuries.

How will the economy adapt to this trend? Is it robust and nimble enough to find other growth catalysts than consumer spending? Or does everything rest on that base? (I never took an econ class; sorry for being an ignorant humanist!)

PS I will charitably assume you weren't being snide in using a pic of a chubby woman to illustrate this entry.

ElizabethD

bbbici

There are plenty of recession naysayers. Average hourly wages and salaries have not fallen, and some economists argue that unless - or until - that happens, consumer spending will hold up despite widespread economic unease.

Doesn't the rising cost of everything have the same effect as cutting someone's pay? Either way your money doesn't buy as much as it used to.

Every time I go to the grocery store I see at least one person standing in front of the milk who is pissed off by the rise in prices.

Rectilinear Propagation

kimsama

@noquarter: We should all cancel cable so we can afford Recessions. And by that, I mean the hilariously named dive bar on 17th and L (you're from DC, right?)

kimsama

1) With high fuel costs, come higher food costs, which leaves less money to buy other things. The rise in these costs is significant enough to cut into discretionary income, but not enough to cause people to change their habits (yet).

2) Real estate values and credit crunch has caused those who financed they lifestyle through home equity loans, to stop spending.

3) For credit spenders, we're getting close to maxing out how much we can finance via credit cards [har har]

4) General geopolitical uncertainity will cause some to be more thrifty, even if there's no real threat.

5) Bush telling us to "go shopping" to help our troops doesn't work as well as it used to.

BTW- the picture is perfect. All the bad of America embodied.

ARP

headon

chili_dog

bohemian

warf0x0r

noquarter

Darkened: yeah, those spend-thrift waste-abouts that foolishly spend money when they encounter a life-threatening health-care crisis (which are the source of over half the US personal bankruptcies). Whatta bunch on wastrels!

Trai_Dep

Yeah, i can't imagine why people aren't buying enough.

SpiderJerusalem

esqdork

darkened