More spending needed to get out of recession
By DAN WHEAT
WENATCHEE, Wash. -- More people need to get married because newlyweds "suddenly become stupid" and spend money they don't have, a Pennsylvania economist says.
Something like that is needed to spur lackluster consumer spending and speed up economic recovery, says Edmond Seifried, economics and business professor at Lafayette College in Easton, Pa.
Seifried spoke at the Washington State Horticultural Association annual meeting in Wenatchee on Monday, Dec. 7.
The United States is in a weak economic recovery, a "recovery lite," that will continue for four to five years because people are afraid to spend, Seifried said.
"The recession was so damaging and frightening to people that they are becoming similar to those who survived the Great Depression," Seifried said. "If any of you have parents from that era, you know they don't make economic decisions lightly. A larger percentage of Americans are starting to behave that way."
Banks exacerbate the problem because they're afraid to lend, Seifried said.
He noted a friend sold replaced his BMW with a Toyota Prius and his neighbor announced she will be buying her clothes at Target instead of Neiman Marcus.
He said monthly retail and food service sales should be at $405 billion but is lagging at $347 billion because consumer confidence is lacking.
"The more we save, the less we spend; and the less we spend means less income for you and me, and that means less total savings. So savings is a very tricky concept," Seifried said. "Japan has been fighting this problem for a number of years."
The U.S. lost 5.4 percent of its economic activity a year ago and will lose 6.4 percent in the next quarter. But even though real unemployment is close to 20 percent, Americans will continue to experience the same standard of living they have today, Seifried said.
That's because the U.S. economy is "so massive that it's beyond description," he said.
The U.S. has a $14.5 trillion gross domestic product. The next largest are Japan's at $4.9 trillion and China's at $4.3 trillion, he said.