|This Is A Huge Driver Of Auto Sales|
Spending has also soared on healthcare starting in fourth quarter of 2013 as consumers rushed to beat projected increases in co-pays and premiums spurred on by Obamacare. Millions of people have gained insurance because of the Affordable Care Act, but this has come at a cost, and while it has unleashed pent-up demand for medical procedures that have been delayed sometimes for years and boosting out-of-pocket household spending on co-payments and prescriptions has soared. Many people have seen large increases in their health insurance payments as a result of Obamacare requirements. As it created a boom in the healthcare sector it has siphoned money away from other areas of the economy. This represents a shift in spending and because wages and incomes are not rising as fast as spending in healthcare it is leaving many consumers strapped.
|Incomes Are Relatively Flat, This Is a Shift In Spending|
I would be amiss not to mention or recognize the growth in a sector I personally find very troubling and that is in what I will call the "online sector" that encompasses both the selling of wireless phones and services as well as internet-sales. In my defense to those who might think me backward or resistant to change, I was one of the first people to embrace the break with landlines by getting one of the first car-phones available and looked into computers back in 1980 when IBM was promoting its new 16k machine. My problem with the current internet craze is two fold and is rooted in concerns over the future well-being of our society as well as who holds power over this and are reaping the benefits. I concede that phone sales have been through the roof and feel this is altering our values and changing the way people interact, and not always in a good way. I'm afraid many people are losing the skill to communicate and relate to each other one on one. The second issue has to do with sales over the internet and how companies like Amazon are major job killers that wreck havoc when allowed to exploit the brick and mortar stores that line our streets and give our communities purpose.
What is being bought, and where the money comes from greatly influences the economy, and that brings us to the issue of the "helicopter money" known as student loans. We are seeing money showered into this sector of the economy at a rate never before witnessed. While a student loan is designed to help students pay for university tuition, books, and living expenses it is being used for far more. Many students are borrowing against their future at an almost unimaginable pace and using their student loan money for things other then education. Too many young people and others taking student loans "living expenses" have expanded to include cars, trips, vacations and more. All of this has a very dark side that will effect the lives of these borrowers going forward. With this easy money society is encouraging young people to take on this debt and to hock their futures. This has been done with several politicians alluding to the idea that at some point in the future government might simply wave repayment making those who have participated in these programs big winners.
All of the above facts point to an economy mired in the kind of growth that is unhealthy and akin to the, "I will gladly pay you Tuesday for a hamburger today" way of thinking. Last year a story on the PBS Newshour told of how many of those newly enrolled in the ACA were people being released from prison. The story told how this will be a big help for the ex-cons who often can't afford and go without healthcare. This means we are now paying for their healthcare and also much of the cost to employ thousands of people to encourage and sign them up for program. While this appears as economic growth in the GDP it is not the stuff of a vibrant economy. It is important to understand that what people are buying and even more important where they get the money from has a direct bearing on the quality of the underlying economy. Much of the spending we see is driven by a huge and growing national deficit and this is a big problem going forward.
Leasing of automobiles is a financialization tool that allows consumers to buy more vehicle than they can actually afford. It will be quite amusing to see what happens to car prices once all these leases come to term along with all the "record" auto product (I mean dealer deliveries) not to mention all the repossessions as corporations trim back their employment to facilitate share buy backs.ReplyDelete
It is quite sad what a banana republic we have become.
"I will gladly pay you Tuesday for a hamburger today" says Wimpy ...Popeye's friend from childhood cartoons in the 1960's!ReplyDelete
Unfortunately, you are absolutely correct in everything you say.