"Worst Is Yet to Come:" Americans' Standard of Living Permanently Changed
Posted Feb 17, 2009 12:53pm EST by Aaron Task in Investing, Recession
There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.
But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:
An $8 trillion negative wealth effect from declining home values.
A $10 trillion negative wealth effect from weakened capital markets.
A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies."
"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."
Going forward, the veteran retail industry consultant foresees higher savings rate and people trading down in both the goods and services they buy - as well as their aspirations.
The end of rampant consumerism is ultimately a good thing, he says, but the unraveling of an economy built on debt-fueled spending will be painful for years to come.
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People are going to have live within their means. Too bad this restraint did not come before now or there would be not global economic collapse.
ReplyDeleteI am glad the whole consumer culture is coming to an end. While others are afraid I am rejoicing. Learn to walk softly on the earth. It is time people. Wake Up.
ReplyDeleteOh, for the days of my residence as an ATM machine. Now, the residence is a money pit.
ReplyDeleteThe history of one stimulus package and bailout after another in Japan for 20 years. The result if the USA continues on the same stupid path:
ReplyDelete1990 Japan stock market 39,000
2009 Japan stock market 7,400
2007 Dow Jones Index 14,100
2027 Dow Jones Index 2,700 est.
It's time to withdraw your savings from the banks and retirement funds before it's too late!!!
ReplyDeleteWe are doomed. The United States is Babylon The Great, and it has been destroyed by the Synagogue of Satan, as they are about to install their messiah, some say he is Obama, to destroy the world, as we know it. You have not resisted the Synagogue of Satan, ever, and you deserve the annihilation, which is immiment. Good bye, see you, in hell.
ReplyDeleteWe are NOT doomed, it aint over until the fat lady sings! Stay strong and healthy, work on mental clarity. Focus. Dried beans & rice will feed you for months. Find a small community that uses the barter system and move there! Stay strong and become a leader because others will need your positive input. We can all win this situation if we take it one day at a time and stay focused.
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