Under Trump the 'engine of the US economy' is breaking

Source: Alternet.org · Bias: Left

Summary

Consumer spending is the primary “engine” driving the U.S. economy. If buyers feel confident enough to spend freely, the economy benefits. But if the situation makes consumers feel more tightfisted, they tend to hold onto those dollars, instigating a cycle in which they spend less and less. This is the case right now due to a variety of factors, and according to experts, the strain it’s applying to the engine of the economy is becoming more apparent. According to New York Times economic reporter Lydia DePillis, “The enduring strength of consumer spending, which powers two-thirds of America’s economic output, has been the main reason that the United States has evaded a recession through successive drubbings over five years: roaring inflation, a rapid run-up in interest rates and a barrage of tariffs.”But now, the war on Iran — with its oil price increases and other economic impacts — may be pushing consumers over the edge. DePillis uses the example of someone who has had their budget impacted by multiple economic pressures at once. Rising gas prices push them to drive less, cook at home rather than dining out, and cancel vacations due to a combination of strapped personal savings and skyrocketing airfare. The trickledown effects of this reduced spending will “have an enormous bearing on the health of the U.S. economy.”And increased prices are only part of the problem. As prices have climbed, wages have not, while government safety net benefits have simultaneously been reduced. Personal savings are at their lowest in nearly 20 years (except for a surge that happened during covid due to government stimulus). Then on Friday, it was revealed that the University of Michigan’s Consumer Sentiment Survey had dropped to an all-time low due to a combination of rising prices and plummeting asset values.This situation has many Americans making difficult spending decisions. According to a Denver resident who lost his job during the federal layoffs and has since struggled to find work, the rising cost of living has become a daily battle to get by. “We have to start thinking about the hard stuff,” he said. “Like do we need to have a third meal a day?”

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Under Trump the 'engine of the US economy' is breaking
Alternet.org

Under Trump the 'engine of the US economy' is breaking

Left

Consumer spending is the primary “engine” driving the U.S. economy. If buyers feel confident enough to spend freely, the economy benefits. But if the situation makes consumers feel more tightfisted, they tend to hold onto those dollars, instigating a cycle in which they spend less and less. This is the case right now due to a variety of factors, and according to experts, the strain it’s applying to the engine of the economy is becoming more apparent. According to New York Times economic reporter Lydia DePillis, “The enduring strength of consumer spending, which powers two-thirds of America’s economic output, has been the main reason that the United States has evaded a recession through successive drubbings over five years: roaring inflation, a rapid run-up in interest rates and a barrage of tariffs.”But now, the war on Iran — with its oil price increases and other economic impacts — may be pushing consumers over the edge. DePillis uses the example of someone who has had their budget impacted by multiple economic pressures at once. Rising gas prices push them to drive less, cook at home rather than dining out, and cancel vacations due to a combination of strapped personal savings and skyrocketing airfare. The trickledown effects of this reduced spending will “have an enormous bearing on the health of the U.S. economy.”And increased prices are only part of the problem. As prices have climbed, wages have not, while government safety net benefits have simultaneously been reduced. Personal savings are at their lowest in nearly 20 years (except for a surge that happened during covid due to government stimulus). Then on Friday, it was revealed that the University of Michigan’s Consumer Sentiment Survey had dropped to an all-time low due to a combination of rising prices and plummeting asset values.This situation has many Americans making difficult spending decisions. According to a Denver resident who lost his job during the federal layoffs and has since struggled to find work, the rising cost of living has become a daily battle to get by. “We have to start thinking about the hard stuff,” he said. “Like do we need to have a third meal a day?”

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