Is it just me or do you too get the impression that the entire world seems to be blaming the US – specifically the US consumer – for the 'mishandling' of their own personal and public finances? I’m not speaking about the past couple of years; this was the global impression of Americans for the past couple of decades.
Yes, it is true: Americans and their fearless government leaders have overspent, borrowed way too much and saved/invested far too little? (Do I really need a news article reference to back this claim?)
Now although we humans are creatures of habit, it is in times of ‘shock and awe’ that we are shaken from our old routines and way of life in to accepting and dealing with what is at hand. With that, circumstances are changing rather rapidly these days as we have seen “the great unwind” of eliminating personal and corporate debts, personal and corporate spending plummet to buying items out of necessity, and savings rates escalate to levels not seen in the US in twenty years.
In fact, this theme is highlighted by well known economist David Rosenburg of G.S. in a recent paper titled “Getting small" is going to imply for the trend in U.S. consumer spending.”
With job losses, home and portfolio values depressed, this new trend will continue to change for even the “better” as Boomers facing retirement are wholly unprepared to do so.
However, the US situation is not as bad as we are led to believe, for there are others in the G-8 in far worse shape. For example, the British are far worse apparently; have been worse than in the US for a very long while, and they are worsening at a swift and heady pace.
They’ve continued to spend their way into personal fiscal oblivion, taking the ratio of household debt as a percentage of disposable income to just under 170%! Compared the US at 140%.
Saverio Manzo
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