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

Philip Arestis and Elias Karakitsos
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Elias Karakitsos: Trafalgar Asset Managers

General Economics and Teaching from University Library of Munich, Germany

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.

Keywords: consumption; jobless recovery; personal sector imbalances; property bubble (search for similar items in EconPapers)
JEL-codes: E21 E32 E37 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2003-06-05
Note: Type of Document - MS Word; prepared on PC; to print on HP/PostScript; pages: 41; figures: included
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Working Paper: How Long Can the U.S. Consumers Carry the Economy on Their Shoulders? (2003)
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