NEWS FLASH!!! DON’T TRUST BUSINESS NEWS!!!
It amazes me to see the garbage that is portrayed as business news in the media. This morning I came across the latest silliness. The headline on a well known website is, “Recovery in danger as firms, homebuyers cut back.” The article then went on to say that without a boost in spending or hiring, the recovery cannot move forward.
The article immediately below this one was headlined, “Credit card debt drops to lowest level in 8 years.” The article then went on to explain that Americans were so wildly over their head in debt that this change is long overdue and very healthy for the long term benefit of the economy.
So which is it? Are we suppose to spend more money and go deeper into debt, as the first article enthused? Or are we to celebrate that people are cutting their debt and laying the groundwork for a healthier economy, as the second article enthused? The two articles, though never meant to be, express completely opposite viewpoints.
It’s this kind of nonsense that creates massive confusion.
So let me tell you what I think. Cutting back on spending — such as firms not hiring and homebuyers not buying — is extremely painful to the economy. Especially to those who need a job or need to sell a house. But that’s part of the pain we must endure to get through this economic meltdown. Seeing credit card debts drop is a fantastic development…not only because it means we are living within our means, but also because credit card debt often RISES in a weak economy as people use it as a last resort. To see debt levels drop means that people have the cash to pay it off or have the self-discipline to do without. Both are good moves.
So I regret that firms are not hiring and homebuyers are not buying. But the underlying strength of our economy is evident in the drop in credit card debts.