Blaming the People for Slow Economic Recovery??

The financial big wigs out there are disappointed by the fact that consumer confidence has fallen for two straight months and US consumers seem to be spending less now than a year ago.  They seem to blame the excruciatingly slow economic recovery on lack of consumer spending.  How might this lack of consumer confidence and reduced consumer spending be explained?

1. The national unemployment rate is over 10% and people are still losing jobs.  By the time you include the underemployed, those whose unemployment benefits have expired, and those who have given up looking for a job, the figure is probably closer to 16%. When you see so many people losing jobs, you get the feeling that you might be next. So you react by saving money, not spending every dime you make.

2. Many of us who still have jobs have been asked to take pay cuts through mandatory unpaid days off (i.e. the furlough), temporary extended lay-offs, and forgoing bonuses. This means that even people who have jobs are bringing home less money-- and for some it amounts to thousands less per year, not a few dollars less per week. Loss of bonuses even if your division is making a profit means taking up to a 20% pay cut.  Mandatory furloughs mean you might take a 1%-5% pay cut.  And those two or three month lay-offs people are experiencing in the auto industry and elsewhere may amount to a 10% or more pay cut on the year once you account for the unemployment these people are receiving.

3.  While we take these pay cuts, we're also being expected to kick in at least 5% more towards our employee provided health care, and 1%-2% more towards our retirement while our employers cut their contributions to both. Our HMOs are also raising co-pays. So we are paying more out of pocket for heath care and retirement.

4. City, county, and town governments are being forced to raise property taxes and school taxes to make up for state cuts in funding for education and social programs.

Overall, consumerism is off in the US right now because people are being forced to do more with MUCH less. We're losing jobs, taking pay cuts, forced to share more of the cost burden for our benefits, and we're facing massive tax increases in many cities because the states are cutting budgets.  Pay cuts and increased benefits contributions combine with tax increases to force us to spend less in stores, restaurants, and entertainment venues.  When your property taxes go up by 20% and your pay is cut by 10%-15%, you simply can't spend as much on consumer goods and services because you are bringing home thousands less per year. My property taxes are going up 20% this year because the state canceled the homestead discount ( In my state, you used to get a discount on the taxes on the house you live in). But I'm taking a 3% pay cut.  Guess my marketplace spending will decrease. It HAS to or I'll be in senseless debt.

Lastly, The People are not as dumb as we look.  We realize that banks failed because of huge amounts of debt defaults by consumers who couldn't make their payments on credit cards, bad mortgages, and bad car loans.  We are well aware of how the financial industry preyed upon some people and many now realize that carrying big credit card balances and buying more house or more car than we can really afford is irresponsible and stupid.  So we are paying down debt, controlling spending, and learning to live within our means. Yet the economic big wigs expect us to go back to out of control spending when we're going to be paying for this last round of predatory lending for decades as we try to pay down the loans our nation took to fund the economic stimulus packages.

The People are concerned with how they are going to pay for what they have and they aren't all that interested in taking on more debt to buy things they don't need. You would think the economic big wigs would get that. After all, it's not rocket science. It's math. And isn't MATH what the economic big wigs are supposedly good at?