Is the economy improving... I certainly hope so, and it looks like it. But there might be another way to look at it... and will your own increase in savings hurt the recovery?
Stock prices are up, monthly job loss numbers are down, unemployment is leveling out... things look good. My own retirement funds are in a lot better shape than they were 6 months ago. I am saving more... spending less, just like millions of others have started doing over the past year. Are we out of the woods? I do not know.... but I do wonder...
As I have been thinking about it, what we may be seeing right now is just a natural re-stocking of the "inventory pipeline". Remember last fall, when the economy tanked... companies stopped making things, because they could not get financing, and inventory levels were at all time highs. Companies laid people off because they could not pay them and they did not need them. But, even though we stopped making things, we kept on buying things already in the inventory pipeline. By about May, that pipeline started to empty out, and companies started to go back to work... starting to produce things that people wanted to buy. Demand slightly improved.
So, what we may have is a natural recovery going on in the economy, but at the same times the stimulus money started to flow... may just a coincidence.
If that is true, and the move towards economic stabilization we see is the result of the handling of the inventory levels, and the beginning to rebuild that inventory, the question is, are people going to start spending again at the levels that they have spent over the past 20 years... before late 2008?
The answer is important because if they don't, yes, we may start manufacturing to meet some immediate pent-up consumption demand.... but if consumption in the future is only going to be 50% to 60% of the economy rather then the 70% that it was before the current recession, it will be a very long time before you are going to see the kind of employment figures we have had in the past.
The current move towards decreased spending and increased savings on the personal level may be good for the individual, but it really could wreck havoc for the economy at large.
Just my thoughts.
Stock prices are up, monthly job loss numbers are down, unemployment is leveling out... things look good. My own retirement funds are in a lot better shape than they were 6 months ago. I am saving more... spending less, just like millions of others have started doing over the past year. Are we out of the woods? I do not know.... but I do wonder...
As I have been thinking about it, what we may be seeing right now is just a natural re-stocking of the "inventory pipeline". Remember last fall, when the economy tanked... companies stopped making things, because they could not get financing, and inventory levels were at all time highs. Companies laid people off because they could not pay them and they did not need them. But, even though we stopped making things, we kept on buying things already in the inventory pipeline. By about May, that pipeline started to empty out, and companies started to go back to work... starting to produce things that people wanted to buy. Demand slightly improved.
So, what we may have is a natural recovery going on in the economy, but at the same times the stimulus money started to flow... may just a coincidence.
If that is true, and the move towards economic stabilization we see is the result of the handling of the inventory levels, and the beginning to rebuild that inventory, the question is, are people going to start spending again at the levels that they have spent over the past 20 years... before late 2008?
The answer is important because if they don't, yes, we may start manufacturing to meet some immediate pent-up consumption demand.... but if consumption in the future is only going to be 50% to 60% of the economy rather then the 70% that it was before the current recession, it will be a very long time before you are going to see the kind of employment figures we have had in the past.
The current move towards decreased spending and increased savings on the personal level may be good for the individual, but it really could wreck havoc for the economy at large.
Just my thoughts.
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So it's probably a good thing that James and I are going to be purchasing some furniture. We're just doing our part to help the economy. Go us! (Jenni)
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