Tags: Zuckerman | us | economy | Consumers | Holding | Back | Recovery

Zuckerman: Consumers Holding Back Recovery

Friday, 18 Mar 2011 10:13 AM

U.S. News & World Report editor Mort Zuckerman says the recovery is progressing slowly, but unless consumers start opening their wallets the economy will remain anemic.

“Who could blame people for holding back when we see roughly 50 million Americans on one or more taxpayer-supported programs, be it food stamps or unemployment benefits?” Zuckerman writes in The Wall Street Journal.

The recent modest growth in the economy is primarily due to massive amounts of federal government stimulus and a huge inventory swing, both of which will peter out this year, notes Zuckerman.

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Mort Zuckerman
“Only the wealthiest 10 percent of the population, whose stock portfolios have come roaring back, are doing well, but their spending is not enough to spur the economy or create much additional hiring,” he says.

This downturn may not have the 1930s feel of despair, but in large part that is because, as the economist David Rosenberg of the wealth-management firm Gluskin Sheff put it, ‘The modern day soup line is a check in the mail.’"

Zuckerman notes that an unprecedented number of Americans are borrowing against their 401(k)s, canceling their life-insurance policies, and forgoing physicals.

"The American consumer today is fearful of the impact of higher food prices, higher gasoline prices, higher insurance costs, higher everything," he says.

"The inflation of food and fuel alone has absorbed the December tax cuts agreed to by Congress and the administration.”

Seeking Alpha reports that recent declines in the average household debt in U.S. families may carry the potential to boost worldwide economic recovery through the increase of consumption, but only if the U.S. consumer starts spending again.

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U.S. News World Report editor Mort Zuckerman says the recovery is progressing slowly, but unless consumers start opening their wallets the economy will remain anemic. Who could blame people for holding back when we see roughly 50 million Americans on one or more...
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2011-13-18
Friday, 18 Mar 2011 10:13 AM
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