Newspaper article THE JOURNAL RECORD

For Advice in Troubled Times, Eceonmists Look to Consumers

Newspaper article THE JOURNAL RECORD

For Advice in Troubled Times, Eceonmists Look to Consumers

Article excerpt

No matter what you may have heard, the ordinary American isn't a financial and economic fool who buys on impulse, invests on tips, borrows recklessly and ignores the news.

That sometimes is the reputation they are given by those who like to claim superior knowledge, such as certain economists and financial advisers who live off the claim that they can see into the future.

But when the chips are down - when the economy's future is in doubt - who do these people turn to for advice? None other than the consumer, whose aggregate buying, selling or savings often determines economic direction.

Consumers speak with their pocketbooks. Theirs is a real world, where they watch their cash.

Growth in personal consumption in the second quarter fell to the lowest rate since the 1981-1982 recession. The increase in retail sales last month was an almost imperceptible 0.1 percent.

Consumer spending for non-durable items such as food and clothing in the second quarter actually fell 1 percent from the comparable period a year earlier, and spending on durables such as cars and furniture also fell.

Consumers are pulling in their credit cards. Installment credit in the first half of the year rose at only a 2.3 percent annual rate, a fraction of the increase last year. The personal savings rate has been rising.

In such numbers as these lie strong, almost certain clues to the future, because the consumer economy makes up two-thirds of gross national product, more by far than government and business together.

These are the clues that so-called experts examine before telling ordinary mortals what they think the economic future holds. It makes ``expert'' forecasting easy; the consumer has already told the expert what to expect. …

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