Earn What You Spend

The paradox of thrift is a phrase that, having traded economics classes for philosophy as an undergrad, I just recently learned.  But it is the exact explanation for the downward cycle of consumer spending we are in. 
Last week, Paul Krugman wrote an excellent article outlining much of what we have been discussing here in the past [...]

Yesterday, expected but still unwelcome news hit the market: real GDP fell by .3 percent in the third quarter of 2008.  According to the Bureau of Economic Analysis:
the decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by [...]

We’ve been talking about consumer spending quite frequently.  And with good reason - it’s a crucial part of the cycle we’re currently in.  Or, as Paul Krugman stated, we face a widening gyre with “feedback loops causing the financial crisis to spin ever further out of control.”  
The WSJ takes a demographic look at the crisis, [...]

Yesterday’s New York Times asked an important question that I think is worth repeating:
Have We Learned Enough? 
We’re in a recession, undoubtedly.  (True, the NBER hasn’t declared it officially, but they issue statements after the fact, when all the evidence is in.)  Could we sink further, into a depression?  With all the bad news on the [...]

From the AP today:
Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier.
So, we’re up 71% in foreclosure filings, which certainly isn’t good news, no matter how you spin it.  But let’s spin it regardless: notice this number is compared to last year.  With [...]

Spending only what you make shouldn’t be a foreign concept.  It’ll become a whole lot more familiar in our current economic climate.
Henry Blodget at Clusterstock explains why consumers are a critical component of this recession.  [via Feelix]
Because the US consumer is finally broke.  For thirty years, we piled on debt and then spent almost every new [...]