The Battered American Consumer: Even the Upper-Middle Class Is Feeling Economic Pain

via AlterNet:



The Battered American Consumer: Even the Upper-Middle Class Is Feeling Economic Pain

By Kathleen Connell, Christian Science Monitor. Posted August 20, 2008.

Consumer spending is starting to play a lesser role in our economy, as households -- even wealthy ones -- downsize their lifestyles.




Bad news continues to batter the American consumer, from negative home equity to weak retail sales and rising claims for unemployment benefits.

One in 3 homeowners who purchased homes since 2003 now owe more than what the property is worth, according to Zillow.com, an Internet service that values more than 80 million homes. The numbers are even more dismal for those who bought in 2006, with 45 percent now experiencing negative home equity.

Equity holdings by households offer no cushion, falling a stunning 41 percent in value for the first quarter of 2008, according to the Federal Reserve's Flow of Funds Report.

Announcements of Wall Street layoffs, bankruptcies of major US retail outlets, and even the decision by Starbucks to close 600 outlets has agitated Americans regarding their future employment.

Reflecting the collapse in housing and equity values, household net worth has dropped for two consecutive quarters, as consumers increasingly depend on credit cards and consumer loans to maintain their lifestyles.

Growing numbers of economists believe that America is now in a transformational economy, where consumer spending may play a lesser role, as households belatedly recognize the need to "right size" their lifestyles. For many families, comparison shopping has become an essential practice. ...........(more)

The complete piece is at: http://www.alternet.org/story/95691/the_battered_american_consumer%3A_even_the_upper-middle_class_is_feeling_economic_pain/

n/t

four more years, four more years of the same with McPain. :P

Bad news for those who bought exurban McMansions, especially since they probably only bought them so people wouldn´t think they´re losers.