Friday, September 9, 2011

Weak consumer spending? Ben Bernanke's view from the Ivory Tower!

The US economy and the view from Ben Bernanke's Ivory Tower can be as confusing as it is fictional!

Back in April I had written an article that compared Fed Chairman Ben Bernanke to a medical school professor who had never actually operated on a real patient.

The result when this doctor actually did get over a patient was paralysis from the neck down.

This occurred because while the Dr. was incredibly book smart, he had no ability to actually fix what was broke.

Those that can do and those that can't reside in the Ivory Tower!

Consumer spending and a surprised Ben Bernanke!

Fast forward to Ben Bernanke's absolute surprise at the fact that consumer spending in the United States is weak two years after, in the Fed Chairmans opinion, the US economy emerged from recession.

Again, from an Ivory Tower perspective and based on the absolute textbook definition of recession I suppose Bernanke might be right.

Unfortunately for most Americans we don't live in textbooks but in real cities and towns with real bills and real financial problems!

"... Federal Reserve Chairman Ben Bernanke says he is surprised by how cautious consumers have been in the two years since the recession officially ended. But the Fed chief offered no hints of any steps the Fed would take to boost the weak economy.

Bernanke says a number of factors are keeping consumers from spending more, including high unemployment, a temporary spike in energy prices, falling home prices and high debt burdens.

Bernanke said the Fed will consider range of policy options at its next meeting later this month without offering any clues to what it might do. His comments were familiar to ones he gave last month in Jackson Hole, Wyo..." (Source)

Some tips for the Fed Chairman on why consumer spending remains weak!

  1. Unemployment rate is 9%
  2. Real wages are falling
  3. Income advances go to the wealthy
  4. Middle class is shrinking
  5. Jobs hard to find
  6. Approval ratings of Congress and Obama at record lows
  7. Consumers have high debt ratios
  8. Home prices are still falling
  9. Homeowners are trapped in their homes, unable to refinance
  10. Boomers need to save for retirement

List source

Perhaps this list will help Fed Chairman Bernanke see beyond his PH.D and into the lives of real Americans struggling with real day to day issues of economic survival!

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1 comment :

  1. Either Benny Boy is clueless or he is being told what to do and say. It really does not matter, neither is good for the US population.