And they decide to save instead and not overextend themselves? What if we reach the same levels as 1970's in terms of consumer borrowing levels and savings. Right now consumers are working towards shrinking the home balance sheet and building up some cash reserves. 70% of our GDP was based on consumer borrowing and spending. So what will replace this? We will have to go back to exporting more if we want to make up for the shortfall.
They don't consumers and businesses made that decision last year. However the government in its infinite wisdom has decided that is a terrible idea. Ergo its behavior for the last 12 months. The problem is consumers have decided not to borrow anymore, but the process of contracting the debt to a reasonable level lets say 35% of where we are at now, is going to take years and be enormously painful. As a result the government is graciously expanding its debt, except the government debt is really the consumers debt but..well its too complicated to concern anyone. Bottom line we are still in the early stages of the actual pain for most people.
when they can't-in US goverment steps in.:eek: Shaky consumer still needs Fed support http://news.yahoo.com/s/nm/20090817/ts_nm/us_usa_economy
Shaky consumer NEEDS to scale back and live within his means. America NEEDS for the government to do the same.