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Consumers are not going to spend us out of this recession and the bailout is not working

07/02/09 06:28 AM Filed in: Consumer lifestyles
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The headlines in today’s newspapers said it all “Job losses rise unemployment at 9.5%”. While many are asking themselves what is going on here I have been saying all along that consumers are not going to spend us out of this recession and that the bailout plan is going to do nothing to regain consumer confidence or reverse the trend of job losses. Banks and financial institutions are already mobilizing their efforts to fight the formation of a consumer agency to watch over their lending and credit card practices and to get around the “bonus” outrage they are now offering employees 50-80% raises. Here in California the state is now issuing IOU’s to vendors and unemployment is closer to 15% in the 8th largest economy in the world.




Notice to the Obama administration: Consumers are NOT going to spend us out of this recession and consumer behavior has changed forever for the following reasons:



1. Loss of home equity: consumers felt that their homes were their nest eggs but that nest egg is not the size of a grain of sand and there are a lot of people who are upside down on their homes (owe more than the home is worth).


2. I don’t trust corporate America: “The only person that I can rely on is myself” is an attitude that a lot of people are coming to embrace. Jobs aren’t safe and even their pensions could be taken away with a restructuring.


3. If I don’t need it I don’t want it: Sorry but I can do with private label products and eating out less. I used to be able to whip out my credit card and charge it but with banks sticking it to me with high interest rates those days are over.


4. I am paying more for healthcare: That’s right my employer is making me pay more towards my healthcare and there are 49 million people without health insurance so I need to save more.


5.Nothing has changed: With all the outrage over abuses of power and money in the financial sector nothing has changed. Banks are now scrambling to pay back TARP money so they can stick it to us again and pay their executives outragious salaries.


6. I can’t get a loan: People will perfect credit are being turned down for loans because we pay back the money we owe.


So when you read the headlines that more jobs are being shed you should not be surprised. Until politicians are willing to stand up and do what is right for the American people vs. their reelection plans we are going to continue to sail in rough waters. As for President Obama? Spend less time on TV and more time getting people back to work !!!
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