The Travelin Man
My fear in responding to this thread is that it will turn into another political rant for others, but here is my take…
Of course things are "slowing" down (business-wise). I don’t know what business you are in, but people, in general, simply have less money to spend on "stuff." I analyzed my own purchases (I use MS Money, so it is easy to compare spending YTD and Yr-vs-Yr), and I know that my outflows this year have far surpassed last year’s – and my inflows have not nearly kept pace. This is simple personal finance. So far, YTD, I have spent more money on fuel for the car, insurance (medical, home, AND auto), health care (an abnormality, I hope, for those of you who know about my medical situation), groceries, clothing, and utilities. The only area of my spending that has decreased? Dining out (and, perhaps some of that can be attributed to being laid up for the better part of the summer) – and one major reason is that it is taking up a larger percentage of my disposal income to do. I don’t know about the rest of you, but my cost increases have far outpaced the rate that the government calls inflation – while my salary has not increased in nearly the same percentages.
That is the microcosmic view. On the macro scale, all the people with adjustable-rate mortgages that have seen their monthly payments rise (or perhaps have had to default?) also have less money to spend. When the Fed cuts interest rates, like it did a couple of months ago, and likely will again when they meet this week, it LOWERS the value of the US$. That is why the CAD$ and the Euro are now worth so much more than they were compared to the US$. Naturally, the Fed is going to try to infuse more capital into the economy heading into the holiday spending season (and, for the longer view, into the election season). Unfortunately, they are just setting up a huge house of cards, that could come tumbling down any time. And, people who pay attention to their personal finances will see this.