U.S. personal spending fell 0.3 percent in September, a bigger drop than expected and a bookend to the weakest quarter in three decades. The numbers suggest that the economy will slump further in coming months. “Consumers have thrown in the towel,” said Nariman Behravesh, chief economist at IHS Global Insight. (Bloomberg)
What the commentators said
So “the long-feared capitulation of American consumers has arrived,” said Paul Krugman in The New York Times. Since “American consumers almost never cut spending,” this is a big deal. And the timing of their “new sobriety is deeply unfortunate.” Sure, Americans have been living beyond their means, but saving now could hurt everybody.
A lot of the drop in consumer spending is tied to the slide in home values, said the Los Angeles Times in an editorial. And although it isn’t a popular idea, “to put it mildly,” we probably need to bail out struggling homeowners. Like the other recent bailouts, it’s a case of having to intervene “when the market can’t help itself.” Call it “a bailout in every pot.”
Well, there is some good news for consumers, said Myra Saefong in MarketWatch. Gas prices “have dropped every day for the past six weeks,” and that could have wider effects on the economy. People are more likely to travel, gas stations are more likely to stay in business, and “consumers are just a little bit happier.” It won’t save us, but it could help.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Russia is stealthily threatening America with nuclear war
- 6 things the happiest families all have in common
- The science of sex: 4 harsh truths about dating and mating
- 43 TV shows to watch in 2014
- 13 Urban Outfitters controversies
- Is 'feminism' just another word for 'liberalism'?
- If Scotland leaves the union, is Northern Ireland next?
- Why you should stop believing in evolution
- What political elites don't understand about Scotland's push for independence
- America is doomed! (And other thoughts on our gloomy historical moment.)
Subscribe to the Week