Recent Consumer Spending Not Enough

Many big wigs like to tout the coming of the economic recovery, and will often go to the media suggesting that “the recession is over.”

Far from it.

Some economists are touting the First Quarter numbers as heralding in the recovery; that this spending trend is a miracle.

In line with the rest of my blogs, many other economists argue that the 1Q spending numbers are not enough to pull the country out of recession.

According to a recent AP story, consumer spending increased by the greatest margin in three years. However, in my honest opinion, this trend is only an indication that the people who have money are spending more of it. This does not indicate long term growth – as the unemployment numbers seem to show.

Instead of passing spending bills, the government needs to cut taxes from businesses. People like to judge the wealthy for having more of the pie, but it is this demographic from which the jobs come. The government, it seems, is only capable of creating temporary, short jobs. It is not capable of creating long-term growth within the private sector.

For a true recovery to spark, the same economists say, the GDP needs to have a sustained growth of about three percent, and would have to have an annual growth of five percent in order to decrease unemployment by one percentile.

During this quarter, it was consumer spending, not necessarily GDP that showed sustained growth. However, if consumer spending increases, it might be an indicator of future growth and recovery. Even though this is the greatest leap in consumer spending since 2007, the economy needs to improve by huge milestones.

Right now, the GDP growth cannot keep up with the unemployment rate, and consumer confidence and spending needs to increase if the recovery is to take full swing. For example, during the 1980s, the annual GDP growth of seven and nine percent for “five straight quarters”, which allowed unemployment to decrease by just one percentile.

In other words, the federal government should focus its attention on getting small businesses what they need to hire more employees instead of bailing out inevitably failing industries.

The big wigs can’t persuade consumers from what they already know.

Chris Buchheit

Chris Buchheit

Chris Buchheit was born under the hot Floridian sun during some year in the 1980s. There he studied school matters until moving to North Carolina in 1999. Possibly due to the fact that his mom had enough of him being inside all the time, he quickly got involved in community affairs via the Boy Scouts of America, where he learned the values of citizenship, morality, duty to God and country, and that the biggest kids get to boss around the smaller ones. Chris attained the rank of Eagle Scout in 2004, and still values the rank as one of his proudest achievements. Beginning in 2006, Chris began attending the University of North Carolina at Chapel Hill, where he quickly learned the value of basketball and poplar trees. Since attending UNC, Chris has been double majoring in Asian Studies, with a concentration in Chinese, and Political Science. When he isn’t slaving over his honors thesis, looking up a bunch of Chinese Characters, volunteering, or mindlessly browsing the same websites over and over, Chris enjoys writing short stories and novels. Much to his roommates’ annoyance, he also spends his free time learning to play the guitar. Above all else, though, Chris values God, his family, and his friends. For the future, Chris plans to apply to Georgetown to further his studies in Political Science, hopefully with a concentration on China. Pending acceptance into Georgetown, Chris would like to study while gaining professional experience in a government job in Washington DC.
Chris Buchheit

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