In a recent issue of New York magazine, dubbed “The Money Issue,” one of the most popular stories is titled The Catastrophist View, in which Peter Schiff, a brokerage president from Darien, Connecticut (and no relation to me), describes five threats to the U.S. economy that could send it into a “free fall.” One of those threats enumerated by Schiff, who goes by the nickname “Dr. Doom” on CNBC: “Consumers Run Out of Steam (and Take the Economy Down With Them).”
The article’s author, Duff MacDonald, writes, “70% of the [U.S. economy's] gross domestic product is accounted for by consumer spending.” What if, he posits, consumer spending is slowed down by rising interest rates and a troubled economy? He cites a recent study which points out that six in ten households have enough savings to last them three months if they were out of a job. A more nuanced explanation would take the air out of the coming catastrophe.
Read the rest of this entry »
Entries (RSS)