Lackluster consumer spending stunts economic recovery
Posted October 5, 2011 5:58 p.m. EDT
Updated October 5, 2011 6:45 p.m. EDT
Raleigh, N.C. — 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."
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."