Read ‘U.S. Recovery:  Spending vs. Saving, Cyclical vs. Structural Unemployment, Double Dip’ e-mailed today to the over 10,000 opt-in (for e-mail) Subscribers to StockResearchPortal.com, a Resource Stock Research website.  In part, the e-mail reads:

An article today titled ‘Spending vs. Saving: Good or Bad?’ advocates saving by U.S. Consumers as ‘the road to recovery’.  I commented on this article, which I suggest you read – reading time 5 minutes – as follows:

“U.S. Recovery: Spending vs. Saving

As I see things, the fewer moving parts something has, the easier it is to understand and hence deal intelligently with in a short time period. The corollary to me is that the more moving parts something has, the more complex it is to understand to the point where if indeed it can be adequately understood at all, the longer is the time frame necessary to deal with it.

I do not believe the U.S. economic problems (note the plural) are as simple as consumer spending vs. consumer savings – nor do I think it likely Mr. Harding does either. That said, I do think there is little doubt that U.S. consumer spending has been the most important part of the ‘gas’ that has fueled the U.S. economy for decades – and that if a car runs out of gas it ceases to be able to deliver its occupants to wherever it is they want to go.

The idea that a population where a large number are without jobs or question their job security can either spend or save at levels it did when jobs ‘were more available and presumed secure’ I see as impractical at best, and nonsensical at worst. I am reminded of a child’s rhyme I once heard: ‘Michael, Michael motorcycle, ran out of gas and fell on his ___’.

The American economy is highly complex with many continuously moving parts, and with new and unexpected ones rearing their respective heads every day – the BP spill, the latest Hurricane, a new ‘trading partner’ issue, a ‘terrorism threat’, etc., etc. I don’t have an ability to understand all the complex inter-workings of it. I will say, that intuitively I think the core issues – that unfortunately I think …….” continue reading

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