Don't count on consumers to bring back the economy

The economic downside to a vibrant consumer society is that when you have an extended recession, they go into hiding. We're a few years into this economy and we're likely to be here for a few more years so there's nothing out there to give anyone enough comfort to freely spend. Even when the economy rebounds, should they really be spending like they did before the crisis?

MSNBC:

Fresh data from the government Friday confirmed that American consumers are tapped out. Consumer spending in dollar terms rose 0.2 percent in August. But those extra dollars went to cover higher prices for food and gasoline; when adjusted for inflation, spending was flat.

Wages, meanwhile, slipped 0.1 percent -- the first decline in nearly two years. To make up the difference, American households had to dip into savings: the savings rate in August fell to its lowest level since late 2009.

"What you're basically getting is a scene where consumers are losing momentum, they're losing momentum on income and as a result of that they're slowing down on spending," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities in New York.
That spending slowdown has rippled through the economy, creating one of the biggest drags on an already weak recovery.