Population Statistic: Read. React. Repeat.
Saturday, May 09, 2021

Whether or not what was supposed to be the Great Recession turns out to be more of a short-lived Great Slump, economists are convincing themselves that a paradigm change in consumer behavior has already set in:

Why might the higher savings rate outlast the recession?

Social critics like David Blankenhorn, president of the Institute for American Values, hope that introspection about America’s “culture of consumption” will awaken Americans to the virtues of thrift, just as the Great Depression reset American financial values for a generation.

But many economists believe consumers will change their habits for more pragmatic reasons.

Consumers have lost a huge chunk of their net worth, in the housing bust and the stock market, and to resuscitate their retirement accounts or children’s college funds they will have to channel more of their paychecks toward saving — unless those asset markets soar again.

Forms of easy credit that were once prevalent, like mortgages with no down payments, also may not return, either because the government regulates them out of existence or because banks dare not venture back into such risky lending. That means if Americans want to buy a house, they will have to save more and borrow less.

Regardless of whatever fiscal walls come up for big-ticket purchases, I don’t see how this latest economic turmoil has been sustained enough to change anyone’s habits. Americans were already notoriously poor savers well before this most recent boom-bust cycle came through — the pronounced consumerist attitude has been around since the ’80s. It’ll take more than a few months of paper losses for a new mindset to take hold.

As usual, analysts are latching onto the at-the-moment public trends, and assuming that those same trends extrapolate toward a prolonged sea change. They’re mesmerized by current data so much that they’re assuming that there’s a self-perpetuation behind it, disregarding the reversion to business-as-usual that even a mild recovery probably will spark. This is the same “forecast debacle” that failed to predict a post-World War II boom, instead of a relapse into a continuation of the Great Depression. They were wrong then, and they’re likely to be wrong now.

by Costa Tsiokos, Sat 05/09/2021 05:11pm
Category: Business, History, Society
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It stands to reason that if someone is homeless, it’s probably because they’re not able to pay a monthly mortgage or rent.

Somehow, this basic logic escapes the City of New York, which is now trying to extract rental payments from the working homeless who are staying in public shelters.

Patrick Markee, the senior policy analyst of the Coalition for the Homeless, called the policy “impractical,” arguing that most working people who live in homeless shelters earn low wages and would be better off saving for a place of their own. “It’s going to make families stay in shelter longer because they’ll have fewer financial resources,” he said.

I’m guessing the next step is to start a per-bowl charge at soup kitchens.

by Costa Tsiokos, Sat 05/09/2021 04:15pm
Category: New Yorkin', Society
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