I guess this is supposed to make us happy: According to various experts cited in the lead story in a special economy-and-business section of today's New York Times, we'll definitely pull ourseves out of our recent economic doldrums soon -- even if we have to bankrupt ourselves to do it:
As a recovery takes hold, the biggest threat to its survival would be a downturn in consumer spending. That is not inconceivable: The support for recent spending - the household cash generated through mortgage refinancings and tax cuts - is disappearing, and a new source of cash, from many new jobs and many new paychecks, is not yet a reality.
But do not worry, various experts say. Consumers will keep spending anyway, going deeper into debt to do so if they must. They have too many needs, some that were luxuries only yesterday....
So as the typical household keeps spending, and as other sectors of the economy revive, the country will prosper....
"The economic upturn does have staying power," said Lynn Reaser, chief economist of Banc America Capital Management, the primary investment management group of the Bank of America.
We're spending more and more for necessities....
Typical households - those that account for more than half of the nation's personal consumption expenditures - have two earners and one or two children.... The two earners bring home together $60,000 to $80,000 a year, and they disperse 70 to 75 percent of it for essentials: groceries, home costs, vehicles and fuel, public transportation, education and health care. That outlay is up roughly four percentage points since 1990, according to the Bureau of Labor Statistics.
...a typical two-earner household with a $68,000 annual income today is earmarking 75 percent of it for such fixed costs as mortgage payments, child care, health insurance, cars and taxes. In the early 70's, only 54 percent of a typical household's $39,000 income went for the same expenses....
But if the past is prologue, heck, we'll just keep spending:
..."What happens when income falls short is that people start increasing the risks they take to keep up their spending," [Elizabeth] Warren [of Harvard Law School] said. Cut off from mortgage refinancing, they turn to home-equity loans, which are now on the rise, and, if they cannot pay their debts, to personal bankruptcy. Bankruptcies have risen in each of the past three years.
In fact, we hardly ever stop spending:
Look back to 1947, a total of 227 quarters. In only 20 of these three-month periods did a drop or weakness in consumer spending curb economic growth or weaken an expansion, and most of that occurred in the early decades. Only three times in the last two decades has consumer spending faltered enough to damage the economy - twice during the 1990-1991 recession and once as the slow recovery got under way. That drag disappeared in the 2001 recession, the first since the 1940's in which consumer spending rose enough to limit the contraction instead of contributing to it.
But if we kept spending all through the past 56 years, didn't we sometimes have recessions anyway? So doesn't that mean we could slip back into another one?
Aw, never mind. I'm probably just being a gloomy Gus.