Let's Clarify this past week - Jun 03,2013

Robert Reich Said “Just look at the bull market! Look at home prices! Look at consumer confidence!” The more sobering reality is this: Almost all the forward movement in the economy is now coming from consumers, but wages are still going nowhere -- which means consumer spending will have to slow because consumers just don't have the money to keep going like this. Consumer spending rose 3.4 percent in the first quarter of this year, according to new figures from the Commerce Department, but the personal savings rate dropped to 2.3 percent — down from 5.3 percent in the last quarter of 2012. Were now at the lowest level of savings since before the Great Recession. And as consumer spending slows, so will the economy. Home prices are rising, but this isnt good news because they're beginning to rise above their long-run historical average. (Before the housing crash they were were way, way above the long-run average.) The Fed is keeping interest rates artificially low, allowing consumers to get low home-equity loans and to borrow against the rising values of their homes. The stock market is soaring mainly because corporations have slashed their payrolls and are keeping them low.

Consumer spending | forward movement | wages | consumer confidence | interest rates