'A Recovery Only a Statistician Can Love'

You think we're in some serious trouble when 70% of our economy is driven by consumer spending! I wonder how much of the consumer spending they calculate is on products even made in the U.S.? Govt. is trying to spur consumer spending by keeping credit loose but that's just a reinflated bubble that's bound to cause trouble at some point. It's hard for me to comprehend how consumer spending can increase but consumer credit is decreasing. How are so many people paying for things? Where's the money coming from? More makes me wonder how these numbers are calculated and what they truly reflect. Are we getting bamboozled? (duh!) - MBC

From Federal Reserve Statistical Release (Aug. 7, 2009)
"Consumer credit decreased at an annual rate of 5-1/4 percent in the second quarter. Revolving credit decreased at an annual rate of 8-1/4 percent, and nonrevolving credit decreased at an annual rate of 3-1/2 percent. In June, consumer credit decreased at an annual rate of 5 percent."

With unemployment around 10% we're still a long way from a real recovery.

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/11/AR2009081100988.html?hpid=topnews

"...boost in productivity was largely due to businesses slashing hours faster than output. Labor costs per unit fell, but so did the buying power of workers, further constraining already weak consumer spending, which accounts for 70 percent of the economy.

Increased productivity, combined with other factors, could also bode poorly for employment because as long as businesses can do more with fewer people, they can delay hiring. Adding to that potential delay is the fact that employers have slashed hours to an unprecedented degree to survive the recession. The average time spent working each week is at a record low, and just under 9 million people are working part time for economic reasons..."

"...Another disturbing development was that the number of people out of work for 27 weeks or longer reached a record 5 million, accounting for a third of the unemployed. That suggests to some economists that those job losses were caused by structural changes in the economy and that many of those people won't be called back to work once the economy picks up. The longer people are out of work, the harder it becomes for them to find jobs and the more likely they are to exhaust savings or lose their homes to foreclosure..."