Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

2010 Economic Forecast: Slow Growth with Chance of Stagnation

25.11.2009
Positive third quarter economic statistics have been greeted with cheers and proclamations that the "Great Recession" is over, but economist Steve Fazzari is not convinced that it's time to celebrate.

Consumer spending, the engine that fueled economic growth for the past two decades is "out of gas" according to Fazzari. "I continue to worry that the household sector cannot support growth over the next few years the way it did before the recession."

With consumer spending accounting for 70 percent of GDP, he considers it a "matter of arithmetic" that the economy will stagnate over the next few years if American households curtail their spending and borrowing to repair their balance sheets.

"We may see a good quarter here or there," Fazzari says. "But there is no obvious source of medium-term sales growth for business in the next few years to replace the recent consumption boom."

Fazzari documents the extended consumer shopping spree that fueled economic growth in a paper published last year.* The research shows how consumer spending was accompanied by a dramatic rise in household indebtedness. Credit cards were maxed out and real estate assets leveraged to extreme levels. Fazzari posits in the paper that household debt is not only a source of growth for the economy but also a risk of collapse. A conclusion that proved to be prescient of the massive home foreclosures, bank failures and collapse of the credit markets that led to the global economic crisis of 2008.

*"Household Debt in the Consumer Age—Source of Growth and Risk of Collapse," Capitalism and Society (BE Press), volume 3, 1-30, 2008 (with Barry Cynamon).

Melody Walker | Newswise Science News
Further information:
http://www.wustl.edu

More articles from Business and Finance:

nachricht Preferential trade agreements enhance global trade at the expense of its resilience
17.02.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Breakthrough with a chain of gold atoms

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

Im Focus: DNA repair: a new letter in the cell alphabet

Results reveal how discoveries may be hidden in scientific “blind spots”

Cells need to repair damaged DNA in our genes to prevent the development of cancer and other diseases. Our cells therefore activate and send “repair-proteins”...

Im Focus: Dresdner scientists print tomorrow’s world

The Fraunhofer IWS Dresden and Technische Universität Dresden inaugurated their jointly operated Center for Additive Manufacturing Dresden (AMCD) with a festive ceremony on February 7, 2017. Scientists from various disciplines perform research on materials, additive manufacturing processes and innovative technologies, which build up components in a layer by layer process. This technology opens up new horizons for component design and combinations of functions. For example during fabrication, electrical conductors and sensors are already able to be additively manufactured into components. They provide information about stress conditions of a product during operation.

The 3D-printing technology, or additive manufacturing as it is often called, has long made the step out of scientific research laboratories into industrial...

Im Focus: Mimicking nature's cellular architectures via 3-D printing

Research offers new level of control over the structure of 3-D printed materials

Nature does amazing things with limited design materials. Grass, for example, can support its own weight, resist strong wind loads, and recover after being...

Im Focus: Three Magnetic States for Each Hole

Nanometer-scale magnetic perforated grids could create new possibilities for computing. Together with international colleagues, scientists from the Helmholtz Zentrum Dresden-Rossendorf (HZDR) have shown how a cobalt grid can be reliably programmed at room temperature. In addition they discovered that for every hole ("antidot") three magnetic states can be configured. The results have been published in the journal "Scientific Reports".

Physicist Dr. Rantej Bali from the HZDR, together with scientists from Singapore and Australia, designed a special grid structure in a thin layer of cobalt in...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Booth and panel discussion – The Lindau Nobel Laureate Meetings at the AAAS 2017 Annual Meeting

13.02.2017 | Event News

Complex Loading versus Hidden Reserves

10.02.2017 | Event News

International Conference on Crystal Growth in Freiburg

09.02.2017 | Event News

 
Latest News

Stingless bees have their nests protected by soldiers

24.02.2017 | Life Sciences

New risk factors for anxiety disorders

24.02.2017 | Life Sciences

MWC 2017: 5G Capital Berlin

24.02.2017 | Trade Fair News

VideoLinks
B2B-VideoLinks
More VideoLinks >>>