“Opposites may attract, but I wouldn’t put my money on a relationship of financial opposites.”
~ Suze Orman
Written by Bryan Lutz, Editor at Dollarcollapse.com:
You hear it all the time.
“Opposites attract.”
Especially when we talk about relationships.
Let’s say your grandchildren are getting married, you get a chance to meet their partner, and then somewhere along the line you realize how they complement each other…
“They’re so sweet together.”
Or if you’re the man in the relationship…
“They’re good for each other.”
And then that is that. Until someone starts to analyze the relationship does one circle back to the old maxim, “opposites attract.”
Well, there is a definite relationship between household income and the amount families spend.
If families feel secure, like they’re going to have more money in the future, a secure job, then they’re likely to spend more.
And the opposite is also true.
If families feel uncertain about their financial future, about their jobs, and about the social institutions around them, then they’re likely to spend less.
But that’s not true right now.
Real Household income is at its lowest since 2005 – two decades.
Now, you’d expect the appropriate reaction.
With less income, personal consumption would be less.
That’s not the case.
Personal Consumption Expenditures continue to drive to record levels.
In other words, people are spending more and more without the income to show for it.
Yes, credit card defaults are going up, but people keep spending.
That’s because in the face of all the economic uncertainty, Americans are optimistic.
Maybe too optimistic.
They’ll figure out soon…
Smart households, like yourself, will do your best to reduce spending, and eliminate those credit card debts.
Take the hard truth…
The lifestyle you ordered is no longer available, until it is…
But right now, the cautious rout (the rout everyone else isn’t taking) is the best rout.
