How Long Can the U.S. Consumers Carry the economy on Their Shoulders?

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How Long Can the U.S. Consumers Carry the economy on Their Shoulders?

Author Info

Philip Arestis (The Levy Economics Institute)
Elias Karakitsos (Trafalgar Asset Managers)

Additional information is available for the following registered author(s):

Philip Arestis

Abstract

The consumer has been on a tightrope since the bursting of the "new economy" bubble, as losses in equity markets have been partly offset by gains in real estate and fiscal support and mortgage refinancing have partly offset increased consumer cautiousness. The consumer will remain on a tightrope in the near future, but if the economy were to stumble, the fragile consumer might contribute to turning the downturn into a deep and protracted recession. There are two risks to the continuation of consumer resilience. The first arises from the fact that this has been a jobless recovery. The second arises from a growing personal sector imbalance that is fueled by the growing property bubble. Hence, the short-term outlook remains uncertain, but the long-term one is bleak.

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Paper provided by EconWPA in its series General Economics and Teaching with number 0306003.

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Length: 41 pages
Date of creation: 05 Jun 2003
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Handle: RePEc:wpa:wuwpgt:0306003

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Paper
- Philip Arestis, Elias Karakitsos, 2003. "How Long Can the U.S. Consumers Carry the Economy on Their Shoulders?," Economics Working Paper Archive 380, Levy Economics Institute, The. [Downloadable!]

Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation

This paper has been announced in the following NEP Reports:

NEP-ALL-2003-06-16 (All new papers)

References listed on IDEAS
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