Stunning collapse in discretionary spending.

[girl gone mad]

Sharpest retrenchment in consumption on record

For the here and now, the triple combination of declining employment, eroding
wages and the conscious effort to raise the savings rate is triggering a near
collapse in consumer spending, which peaked in nominal terms in June, has
declined every month since and is down at a 5.2% annual rate. This goes down
as the sharpest retrenchment in consumption on record.

During that time, discretionary spending has collapsed at nearly a 15% average
annual rate: motor vehicles (-38.7%), movies (-36.6%), air travel (-32.7%),
sporting goods (-12.7%), hotels (-12.5%), casinos (-11.7%), jewelry (-10.3%),
furniture (-9.8%), home improvement (-8.2%), appliances (-7.3%), clothing
(-6.6%), computers (-6.5%), electronics (-6.5%), toys (-3.3%) and books (-2.3%).

Even recession proof items are being cut back on

Even so-called recession-proof items like food (-3.6% SAAR) are being cut back
on as households shift from veal marsala to pot roast, and from brand name to
private label (in real or unit terms, food consumption has declined for six months
in a row, so this is not just about lower prices, but also about shifting spending
patterns even when it comes to grocery shopping). Utilities have also declined at
a 4.9% annual rate, though some of this is clearly price related. There are also
widespread anecdotal reports of households falling behind on the monthly gas
and electricity bills.

http://www.investorvillage.com/smbd.asp?mb=5029&mn=31423&pt=msg&mid=6493489

[whistle]

1. Hyperinflation has wiped out the American middle class

[natrat]

2. no, we get hyperinflation after demand is destroyed supply then contracts

then with the insane money printing we get the real deal inflation

[girl gone mad]

5. I think we did have hyperinflation over the past 30 years..

particularly in housing, energy, education and some commodities. The dollar also collapsed against several currencies. Now we're seeing the deflation. Who knows what could happen down the road. Maybe more inflation, maybe a new currency or form of trade. Maybe the Fed can actually mop up their mess and our government wises up and nullifies derivatives contracts at the heart of the crisis. We'll still be stuck with debt that we can never pay off..

[Warpy]

3. Hyperinflation combined with wage depression

with debt substituted for wages to cope with inflation.

You can run an economy on debt. You just can't do it long term. Eventually you reach a crisis point with debt when servicing it starts to compete with subsistence. A lot of families have been there for some time.

People aren't spending for a variety of reasons: the jobs are not secure, the interest rates on everything from their mortgages to their credit cards are going up, prices are going up, and the wages they don't think they can rely on enough to take on any new debt are stagnant or even declining.

In addition, the safety nets of both government programs and employment benefits have been shredded. People are finally starting to understand what underinsurance means in terms of financial ruin if they get sick even if they have employer provided insurance plans.

We've now had supply side economics in place for 28 years and this is the end game it always produces. Starving the demand side never works because economies simply do not work from the top down.

[Enthusiast]

7. Yes, if jobs were only secure.

But how can jobs be secure when there is no market for goods and services?

[SergeyDovlatov]

6. Not yet. Hyperinflation is something along the lines of 20-30% per month

We are nowhere near that time.

Though if you compare against 1913 (introduction of central bank in US), we had 25000% inflation over 100 years.
Current dollar is worth about 4cents compare to 1913 dollar.

[izquierdista]

4. Movies and books

Movies down 36% and books only 2%? Looks like a lot of people are taking Mom's advice.

[elocs]

8. Books: that is what libraries are for. In this economy, why would I spend money on books?

I also don't rent videos, but check them out for free at the library.