Consumer spending declines: A historical oddity

Posted by Yen Ho
Written by Carter Doughterty

That the American consumer is cutting back spending is blindingly obvious these days, but it is still hard to over-emphasize this central feature of the current recession. Americans borrowed like crazy for years against their home values, which have now fallen and are dragging consumption down with them.

The sustained decline in consumer spending is also — as the European Central Bank points out in a tight piece of work synthesizing features of past recessions — a historical oddity of the first order.

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