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America’S Role As Consumer Of Last Resort Goes Missing

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Not long ago, before the financial crisis and the global recession it triggered, economists referred to Americans as the consumers of last resort. When the U.S. grew at a healthy pace, its citizens were buyers, fueling demand for the goods China (CNFREXPY) and other nations produced. They kept the world economy humming.

It may not work that way anymore, Bloomberg Markets magazine will report in its January issue. A rebounding U.S. is giving less support to global growth than in the past. Homegrown demand and production are more important drivers of the world’s biggest economy than they were a decade ago.


The first spending decline on a Black Friday weekend since 2009 reinforced projections for a lackluster holiday, increasing chances retailers will extend the deep discounts already hurting their profit margins.

Purchases at stores and websites fell 2.9 percent to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation. While 141 million people shopped, about 2 million more than last year, the average consumer’s spending dropped 3.9 percent to $407.02, the survey showed.

Ben should fly his helicopter directly to the shopping centres to drop his cash...

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Shale is certainly having a negative impact on US oil imports but the real story is that the faltering recovery is being driven by asset price inflation rather than broad-based demand.

In fact, there's been a secular slowdown in US growth since the 1970s. Steve Keen identifies three causes:

1. Transfer of production from the 1st to the 3rd World.

2. Rising income inequality (demand for luxury yachts up, demand for almost everything else down).

3. Household debt has created a liquidity trap that monetary policy cannot resolve.

End This Depression? Never.


Edited by zugzwang

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