Red Headlines For May 1, 2008

Low Spending Is Taking Toll on Economy

For months, beleaguered American consumers have defied expert forecasts that they would soon succumb to the pressures of falling home prices, fewer jobs and shrinking paychecks. Now, they appear to have given in.

On Wednesday, the Commerce Department reported that the economy continued to stagnate during the first three months of the year, with a sharp pullback in consumer spending the primary factor at play.

Pressures on households in which cash is tight appeared to weigh significantly in the calculations of the Federal Reserve as it rolled back interest rates Wednesday for the seventh time since September — this time by one-fourth of a percentage point — in a bid to prevent a further falloff in the economy.

The Fed made clear, though, that investors and borrowers should not expect another drop in interest rates anytime soon. In the statement accompanying their action, policy makers said they believed that with the short-term rate at 2 percent, they had already unleashed enough economic stimulus to “help promote moderate growth.”

With the overall economy growing at a mere 0.6 percent annual rate for the second quarter in a row, consumer spending advanced by only 1 percent, the government estimated. That was down sharply from the 2.9 percent gain for all of 2007 and the 3.1 percent gain for 2006. It was the weakest showing since 2001, the last time the economy was ensnared in a recession.

Even more ominously, Americans cut back on a wide variety of discretionary purchases, conserving their cash for necessary spending.

Emphasis added by me.

Hey, doesn’t the Times know about the sell-offs going on?

Fewer Latino Immigrants Sending Money Home

In a sign that the economic downturn is hitting hard among Latino immigrants, more than three million of them stopped sending money to families in their home countries during the last two years, the Inter-American Development Bank said on Wednesday.

Growing numbers of Latino immigrants are also considering giving up their foothold in the United States and returning home in response to a slump in low-wage jobs and the crackdown on illegal immigration, the bank reported in a survey of 5,000 immigrants from Latin America.

The survey found that only half of the 18.9 million Latino immigrants in this country now send money regularly to relatives in their home countries, compared with 73 percent two years ago.

“The major dynamic that is holding them back from sending money is fear,” said Sergio Bendixen, a Miami-based pollster who conducted the survey. “They don’t know whether they won’t be able to get a job anymore.”

Emphasis added by me.

And if they don’t have access to unemployment benefits or social services, are we going to see a jump in crime?

Explore posts in the same categories: C.O.A.T. - Belief, C.O.A.T. - Money, C.O.A.T. - Other, Depression 2.0, Red Headlines

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