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
Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
Whether you call it effervescent, fizzy, or sparkling, carbonated water is making a comeback as a beverage. Aside from quenching thirst, researchers at the University of Illinois at Urbana-Champaign have discovered a new use for these "bubbly" concoctions that will have major impact on the manufacturer of the world's thinnest, flattest, and one most useful materials -- graphene.
As graphene's popularity grows as an advanced "wonder" material, the speed and quality at which it can be manufactured will be paramount. With that in mind,...
Physicists at the University of Bonn have managed to create optical hollows and more complex patterns into which the light of a Bose-Einstein condensate flows. The creation of such highly low-loss structures for light is a prerequisite for complex light circuits, such as for quantum information processing for a new generation of computers. The researchers are now presenting their results in the journal Nature Photonics.
Light particles (photons) occur as tiny, indivisible portions. Many thousands of these light portions can be merged to form a single super-photon if they are...
For the first time, scientists have shown that circular RNA is linked to brain function. When a RNA molecule called Cdr1as was deleted from the genome of mice, the animals had problems filtering out unnecessary information – like patients suffering from neuropsychiatric disorders.
While hundreds of circular RNAs (circRNAs) are abundant in mammalian brains, one big question has remained unanswered: What are they actually good for? In the...
An experimental small satellite has successfully collected and delivered data on a key measurement for predicting changes in Earth's climate.
The Radiometer Assessment using Vertically Aligned Nanotubes (RAVAN) CubeSat was launched into low-Earth orbit on Nov. 11, 2016, in order to test new...
A study led by scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg presents evidence of the coexistence of superconductivity and “charge-density-waves” in compounds of the poorly-studied family of bismuthates. This observation opens up new perspectives for a deeper understanding of the phenomenon of high-temperature superconductivity, a topic which is at the core of condensed matter research since more than 30 years. The paper by Nicoletti et al has been published in the PNAS.
Since the beginning of the 20th century, superconductivity had been observed in some metals at temperatures only a few degrees above the absolute zero (minus...
16.08.2017 | Event News
04.08.2017 | Event News
26.07.2017 | Event News
23.08.2017 | Life Sciences
23.08.2017 | Life Sciences
23.08.2017 | Physics and Astronomy