Funding The Next Economic Boom
I am always a bit amazed at how the current economic crisis is affecting how people are spending their money. Retirement accounts aside, many people have just as much money now as they did a month ago. They are still working at their jobs, earning the same salaries. Not only are they earning the same they did two months ago, but they are paying cheaper prices on gas and food.
What does that mean? Their discretionary income is increasing. Yes, you got that right, their discretionary income is increasing. What is remarkable is that this increase in discretionary income is being met with a reduction of retail spending.
In other words, income is steady, spending is down, prices are down. The net result is that there is more money sitting on the sidelines now than there was just two months ago. I think this money is being parked into savings right now. People are doing their best to be as cash positive as they can be right now. What’s interesting is if this trend continues through Christmas, the retail industry is going to be hit with some very tough times, but as I have said before, whenever there are losers, there are winners.
This money sitting on the sidelines is eventually going to have to enter the system somewhere. Americans are eventually going to start looking for some decent returns on this savings and that means a huge opportunity for those in the investment industry. In fact, American might fund the next boom in the economy.
We can be hopeful, can’t we?
Comments
2 Comments on Funding The Next Economic Boom
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cchiovitti on
Fri, 17th Oct 2008 8:43 pm
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Sarah on
Sat, 18th Oct 2008 5:47 am
Gas is about half a dollar cheaper than it was a month ago. True.
But food? What planet are you living on? My grocery bills haven’t gone down one iota. I spend the same amount each week at the grocery store, I stick to my budget, but my budget doesn’t even come close to buying what it did a few months ago.
Makes sense to me. Good work.
saraht43
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