Economic Nerves (OR Why we have no confidence)

The lead story on Marketplace yesterday sought to identify why consumer confidence is at it’s lowest level in 16 years.

Everybody’s worried about gas prices. They hear about investment banks’ troubles. Home equity loans are just a pleasant memory. Unemployment is over 5 percent. But hey, it was worse in the 70s, and we had disco music on top of everything else…

    William Hummer: We had an impeachment, a very deep recession, and yet I don’t think the consumer sentiment readings were much worse then than they are now.

That’s William Hummer, chief economist at Wayne Hummer Investments. He says we don’t have 70s-style inflation or unemployment now, so why do we feel so bad? The usual suspect: the media.

Has it not occurred to anyone that the reason we feel so bad about the economy is that we’ve had 30+ years of Republican economic policies in force to separate us from our money. We’ve moved from savings and investments, to home equity, to credit cards. We don’t have the access to the money we used to. We’ve been living outside our means for years, not necessarily because we generally lack fiscal discipline (although that’ probably true) but because our incomes haven’t kept up with inflation for 30 years.

Now, the dollar is falling. Our already diminished resources buy less and less of those things we use most (food and gas). The economy is hemorrhaging jobs. House values are still plummeting. And there’s a war funded by deficit spending.

And the best explanation a “chief economist” can come up with is the media?



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