Is It Morning in America Yet?
Our long national nightmare is over. That’s the apparent sentiment in the consumer confidence index.
The Gallup survey indicated it was at –10 last week, which is the best score since the beginning of the year. That score indicates confidence in the future. Gallup’s current conditions number was good, too, matching the year’s best at –8. So, together they mean consumers are more content now and their outlook is lifting.
Income rose a little in September, .2 percent in personal income and .1 percent in disposable income, according to the Bureau of Economic Analysis. In fact, they are the latest of a string of increases in income. But the same report showed that consumers are not disposing of that income. Spending dropped .2 percent.
The savings rate is steady and has been climbing slightly this year, since a collapse in the rate two years ago. It was 8.2 percent in November 2012 before it plunged to 4.5 percent in January 2013.
These seemingly conflicting data have some people frothing about why consumers aren’t spending and propelling the economy. One headlined a blog post, IF CONSUMERS ARE SO (marginally deleted expletive fully deleted) CONFIDENT WHY AREN’T THEY SPENDING?
It is one of those screeds that give the Internet its color. In this, case it’s the red of rage. But the writer was assuming that consumers need to one day wake up and start spending to fuel the economy.
Another, perhaps more healthy, way to look at it would be that consumers learned their lesson from the downturn and are putting a little money away and cutting debt. It’s probably what the screaming blog writer said consumers should do in the darkest days of the recession.
Besides, even though incomes are rising, people are not becoming significantly better off. In fact, not only is the gap widening between the richest and poorest, but the great middle class is stumbling, too. The U.S. middle class is no longer the world’s richest.
So, who might have the money to prime the economy’s pump? Well, corporations seem to be sitting on a pile of money. Earlier this year, Standard & Poor’s released a report called, “2014 Cash Update: Corporate America’s Richest 1% Keep Getting Richer.”
“Wealth distribution among U.S. corporations is becoming ever more concentrated, with the top 1 percent controlling 36 percent of the overall cash and short-term investments versus 27 percent five years ago,” according to the report.
They have the money to spend, so why aren’t people yelling at corporations to spend? Pundits seem OK with kicking consumers in the ribs as they struggle to their feet, but then the money that corporations are sitting on is somehow sacrosanct. Sure, the corporate tax policy needs to be changed, but American companies also need to be American.
Extra bonus section for readers who recognize the quote that opened this blog. President Gerald Ford uttered that phrase in his inaugural address after President Nixon had resigned in Watergate disgrace. Just to help some of you folks appreciate your advanced age, I’ll remind you that Ford’s speech was 40 years ago this summer.
That was a particularly low point for America. We somehow got through it, although the rest of the 1970s were still a struggle. The plaid polyester pants didn’t help.
Although that quote is one that history remembers from that speech, Ford had another statement in it that might serve us well now: “Let us restore the golden rule to our political process and let brotherly love purge our heart of suspicion and of hate.”