Doom and Gloom for Whom?

Bloomberg prattles on endlessly about the economy,but this is the good stuff.

Retail sales fell 0.1 percent for all of 2008 compared with the prior year, the first decrease in the Commerce Department’s records. Comparable data only go back to 1992 because government economists reformulated their retail-sales figures earlier this decade, and didn’t revise historical records beyond that year.

November’s decline was revised to 2.1 percent from a previously estimated fall of 1.8 percent.

Today’s report showed declines in 11 of the 13 major categories tracked by the government, led by a 16 percent plunge at gasoline service stations that partly reflected the slump in fuel costs. The drop at grocery stores was the biggest since April 2002 and the decrease at restaurants was the largest since the terrorist attacks in September 2001.

Auto Slump

Purchases of expensive goods are falling as banks restrict access to credit. Auto sales fell 36 percent in December from the same month last year, capping the industry’s worst year since 1992.

Same-store sales dropped 2.2 percent in the last two months of 2008, making it the worst holiday shopping season in almost four decades of record keeping, the International Council of Shopping Centers said last week.

It's a given that this will all be taken as a sign of the Second Coming,Ragnarok,or whatever your cultural end times story is. Who ever says it's harming the economy is dead wrong and should apply for a job with Bernanke and the rest of the Banana Splits.

Lower prices are not going to hurt consumers,if lower prices was a bad thing why not set a minimum price of everything. Wait,maybe that's what the various tax codes and minimum wage do. You'd think it was the worst thing in the world that consumers would save money ,especially since the PTB love to harangue about Americans non-existent savings.

Now they're bitching about how enough spending isn't going on. Nevermind that consumer spending doesn't drive the economy. The consumer directs manufacturers as in what to make,how many ,what style,etc,etc.

To tie it rather quickly together,consumers spend,consumers direct manufacturing, prices drop,people save money,banks build up reserves from peoples savings allowing credit and savings to realign,people use saved money to buy things at a later date. While all this is going on producers are forced to lower prices as the cost of money goes up,i.e. purchasing power increases.


Throw in a monkey wrench called a 'we gotta do something congress/president' and what you get is a nice long drawn out recovery.