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Consumers no longer see dwellings as a surefire investment, especially with continuing foreclosures and falling valuations with no end of pain in sight.
Moreover, since late 2007 to mid-2011, an estimated $7 trillion of household net worth was lost. Recouping modest amounts of that will take years, and for older workers nearing retirement it's too late.
"Long and variable lags between changes in household net worth" and consumer spending patterns suggest protracted demand weakness for years. Emphasizing savings and budget priorities will impact most discretionary goods and services negatively.
Ahead, emerging economies will far outdistance America even though global demand overall relied too long on the US consumer for growth. That "well (ran) dry. This time for good," at least for the long term.
Moreover, the combination of rising US savings reducing aggregate demand will be deflationary for years.
It also suggests protracted hard times for beleaguered households, struggling through hardships not helped by counterproductive policies.
They understand it better than Wall Street's best and brightest, getting fat bonuses while working Americans suffer.
Stephen Lendman lives in Chicago and can be reached at Email address removed.
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