Bending the Third Rail
Because We Should, We Can, We Do
Saturday, January 13, 2007
Econ 101
Here is a summary of economic reports for the week from Tim Iacono of "The Mess That Greenspan Made":
Summary: Higher consumer spending enabled in part by increased credit card debt has once again proved the old axiom, "Never count out the American consumer". The latest reports show that consumers are turning away from home equity withdrawal and are back to using credit cards after a long period of low credit card spending. What appeared to be capitulation during the months of August, September, and October was reversed in a big way over the last two months casting new doubt on whether a consumer led economic slowdown is in the cards for 2007.
I wonder if this spending isn't a final party during the holidays prior to a serious pullback in consumer spending in the pre-tax winter.

It is astounding to me that consumers continue to spend, living well beyond their means. The "wealth effect" of the housing bubble is gone and yet there still seems to be a complacency about the future risk of being seriously in debt. I wonder how long that can continue and what will change it? I do know it cannot continue forever. But it seems that, like earthquakes, the longer it takes for pressure to be released the larger the tremor.
Written at 12:40 PM by Greyhair.
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