Consumer spending cliff? (chart)

By Taxpayers Association of Oregon

The Wall Street Journal had a superb article and chart (which we tweaked) that explain that America has a big fourth quarter growth cycle last year.

But the red flag comes in the imbalance of the report.

Consumers and government are spending strongly while business investments is more mild.

• Consumers are fueling their spending binge by emptying out their savings as the average savings rate falls below the traditional 5%.
• Consumers are fueling their spending binge by maxing out their credit cards (Credit card debt hits record high).
• Consumers are spending recklessly while missing car payments as car defaults hit 29-year high.

Then there is government spending.

Having economic growth driven by government spending really means government borrowing.   Our economy is being boosted by borrowed money that we have to pay back at a high cost.

Our debt is at historic highs and it can’t keep going up without risking economic danger.

The econ-Fact had this chart/article that we enhanced to show how it compares to WWII spending levels.

These factors combined with a more tempered business investment (as seen in chart) means that businesses is not healthy enough to grow as they wish.

There is real danger of economic trouble in 2024 and lawmakers should respond by slowing government spending to normal levels, pay off the debt and boost the economy with tax cuts and cutting red tape.


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