alstry (99.56)

Is American Consuming Itself To Death?

October 30, 2009 – Comments (3)

As many of you know, America is a service/consumer economy.  The vast majority of our production is simply for our own consumption.  As a percentage of GDP, our exports are less than 10%.

The biggest consumer of all is Government.  Our Government consumes about half of GDP and much of our production is simply created to service government and those that work for government.

Right now, revenues/receipts to Government is evaporating....we are seeing it everywhere including California, New York, Florida, Arizona, Illinios, just to name a few.  Yesterday we saw corporate/franchise tax receipts to Utah down almost 80%.....80%....and in Utah of all places.

Prior to the government tax receipt downturn, we already saw massive contraction in the economy.  We saw homebuilding decine 75% and auto sales decline 50%.

Now we are starting to see massive cuts to government consumption and spneding...Hospitals, Schools, Universities, Police Departments, Fire Departments, and many other areas.  Very labor/consumer intensiver areas.

As a consumption/service economy...it is jobs that drives production and such production is driven by our own consumption.  If we are not working, we are not consuming, and if we are not consuming, we are not producing very much.

The slowdown in tax receipts over the past six months has been unprecedented....EVER.  So has the rise in the budget deficit to compensate.  Despite running a deficit of thousands of dollars for every many woman and child, carload rail traffic is still down double digits.

Our service/consumption economy is on life support.  The only thing sustaining it right now is government running a massive deficit which is unsustainable and growing.  We morphing into a welfare economy where approximately 40,000,000 Americans are on Food Stamps and 20% of our workers are un/underemployed.

The problem arises maintaining our welfare economy against evaporating tax receipts.....income in America is dropping way too fast to support Government's rising needs.

It is why our businesses are shutting down, commercial real estate becoming vacant, and over half a million people are applying for first time unemployment claims each week.

Why is this time different?...because so few are hiring to sustain our consumption/service economy.  Those that are losing their jobs are staying unemployed longer than ever before.  As a result, our economy keeps shrinking further and further into a concentric contraction.

Absent some new labor intensive technology or other event, this process mathematically continues due to the massive debt overhanging our nation.  As incomes decline, servicing debt becomes harder and harder causing families, businesses and Government to fail.

Without families, businesses, and Government generating an income....we can't consume.....and if we are not consuming....we will have little to produce or service and thus not have much of an economy.

Now we are feeling Zombulation.....let's hope someone realizes it and changes policy soon.