06.24.08
More On The Economy, In 16 years..
Consumer Confidence Tumbles to 16-Year Low:
U.S. consumer sentiment slid to a 16-year low in June while house prices suffered record annual drops in April, according to data on Tuesday that suggested a retrenchment in spending that will keep squelching economic growth.
The Conference Board’s monthly survey of consumers showed the overall index of consumers’ mood fell to 50.4 in June, the lowest since 47.3 in February 1992.
The index has now dropped by more than half since 111.90 last July, before the housing market troubles triggered the most severe credit crisis in at least a decade.
“To put it in perspective, that’s a bigger decline than what we saw after the September 11 attack and Hurricane Katrina,” said Dana Saporta, economist at Dresdner Kleinwort Securities.
“It sends out the signal that the consumers are not about to ramp up their spending,” he said.
Time for The Great Pendulum…to Swing Again.
The great pendulum of American economic outrage moves back and forth over time between anger at big government and anger at big business. For almost thirty years, big government has been the target - starting with Ronald Reagan’s admonition that government is the problem, not the solution; through Bill Clinton’s declaration that the era of big government is over; and George W. Bush’s hands-off brand of free market fundamentalism.
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The reality is that neither big government nor big business is the problem. Both are necessary parts of a modern economy. Problems arise when they’re out of balance - as they were by the 1970s, when government had grown so large it was stifling the economy, or as they have become this decade, as big business, including Wall Street, grew so irresponsible as to undermine public trust and threaten the economy.
Now the pendulum of outrage is swinging back against large corporations. America is heading toward another era of regulation. The real question is how smartly we go about it, and whether we can keep the pendulum from swinging too far.
Very well stated.