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Lackluster consumer spending stunts economic recovery

Posted October 5, 2011

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— With North Carolina's unemployment stuck at more than 10 percent, turning around the economy will likely take years, according to experts. One of the major problems is that consumers – even those with jobs – have cut back their spending.

"Unfortunately, if you look at the numbers, household debt levels are still too high," said Mike Walden, an economist with North Carolina State University.

Walden describes the economy as moving sideways, in part because people aren't buying things like they used to. Businesses are adjusting to the more frugal attitude, which is one reason why they're not hiring like would in a typical economic recovery, he said.

"The most optimistic forecast I've seen is another two years of belt-tightening. The least optimistic is another eight years. So, (it's) probably somewhere between that span," he said.

Rick Zambenedetti said he can see the drop in consumer spending at his hot dog cart in downtown Raleigh. Where he would sell 400 to 500 hot dogs a day five years ago, he's now down to 100 to 120.

Zambenedetti had to raise his prices eight months ago and still makes only 70 cents off each hot dog.

"Everything I put on the hot dog costs me more money now," he said. "So, unfortunately, I had to go up 50 cents, which doesn't make me more money in my pocket. It just levels it out a little better."

Hot dog purchase No consumer spending means no hiring

Steven Valentine said spending $5 for lunch from Zambenedetti's cart is a luxury he can't afford often.

Before he got a job at a downtown construction site, Valentine said, he had been unemployed for almost three years.

"I'm still catching up," he said, noting that his paycheck goes towards necessities and erasing his debt. "It's going pretty well. I'm just thankful to be working."

Zambenedetti knows how Valentine feels, saying he doesn't spend on much beyond necessities.

"I work to pay my bills," he said, "just to keep a roof over my head, keep my daughter clothed ... keep clothes on her back, keep clothes on my back."

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  • Nancy Oct 6, 2011

    Didn't our state just rake in $140,000 more in sales tax than anticipated?

  • drh3102 Oct 6, 2011

    One person says the economy is failing because we don't spend money. The next person says the economy is failing because we spend too much. I think the economy is failing because the Banks and Big Business is taking all the money for their big jets, parties and private homes in other countries

    .

  • justjean Oct 6, 2011

    Even when we do spend money, it just goes to boost China's economy, not ours.

  • storchheim Oct 6, 2011

    Another boost would be for the banks to loosen up credit requirements. I found a lender that doesn't sell their mortgages to Fannie and Freddie, and allows medium-sized loans to people with good credit who can show the past 2 yrs income would have covered the loan payments. As an unemployed (for now!) person who has been longing for a new loan, this is a lifesaver!

    It's this type of common-sense, case-by-case action we need. I'm not saying go back to the days of lending big money with no proof of the ability to pay, but if a person has been a big earner and paid their bills

  • barbstillkickin Oct 6, 2011

    It is so sad to read all the comments from regular folks here. I see so much pain in the words they write. God is our only chance to help the pain. We have no say in what happens in our own lives in our own country because we put people in offices hoping we made the right chose but then when the bills pile up and the job is gone we just wonder what happened. Well we can fix it next election. Vote every office out and put all new in and hopefully it might just make a little difference.

  • grimreaper Oct 6, 2011

    Apparently this is good news as the market is up almost 400 pts from where it started this week...Wall Street will make a market whether there is one there or not...as long as 401k, 403b, and funds continue to dump billions into the market every two weeks...there are no more shares of stock now than yesterday so all you can do is buy at a higher price...the only buyers during the downshifts are the market makers...then they sell it back at a markup days later...they are making billions...

  • Rebelyell55 Oct 6, 2011

    Yep, ya can't spend what ain't got..

  • All the People Oct 6, 2011

    "Actually you should get your facts straight before throwing that progressive stone. The price of oil reach OVER $100 a barrel under obama's admin. It has since started to trickle down but not due to anything this admin has done. The price is for the first time down below $90 since, what Feb?"

    Oil is a globally traded commodity and while the US is not quite to the point of being a price taker, we do not have a large impact on oil prices. Even if we do up our oil production domestically it will not drop the price for oil strictly in the US it will affect the global price which would not be changed by much. So the oil prices are not actually set by the administration and they do not have the power to move them up or down.

  • Rebelyell55 Oct 6, 2011

    We'll ain't that something, I said it would be two more years before we started up and some highly (I'm guessing here) educated person said the same thing. So I'm wrong now I guess. What not being fiquired in is if congress passes the job bill, the slight increase will lead to a much greater drop next year or so. This drop will be worse than what we see now and it'll be five years to regain from the false sense recovery made by the job bill.

  • NiceNSmooth Oct 6, 2011

    I predict there are going to be some great deals this christmas season as retailers are going to be fighting to get what little money will be spent

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