Friday, October 7, 2011
I've been blogging for a while now at least for a year, that the main problem with the American Economy. Is because of the lack of the Consumer Spending, which has led to our lack of Economic Growth. Which is why our Unemployment Rate has remained so high going on three years now. And that if we want to stimulate the economy to jump start Economic Growth, people have to start spending money again . Buying and in investing in things that they've been putting off because they are worried about losing their jobs. Or are drowning in debt, so every new dollar in revenue they get. They spend on paying off their mortgages or Credit Card bills or putting the money in their Savings Account. Or putting money back in their Retirement Accounts that they lost when Wall Street sunk in 2008. So for the Federal Government to get Economic Growth going again, 4-5% or better. They have to encourage Consumer Spending, especially in the Middle Class. Where most of the country lives and Tax Cuts is a way to do this but it has to be done in a way that encourages Consumer Spending. So consumers that receive this money, doesn't pocket it or use it to pay down their debt or mortgage. But actually spends that money on things that stimulates the economy. Like shopping, eating out, buying new devices, cars etc, buying things that gives business's revenue. So they can start hiring again and putting people back to work
I don't think we get to strong Job Growth without strong Economic Growth. So we need to encourage Economic Growth and the people will start hiring again which will lead to Job Growth. Because business's will start making more money and see their profits rise. And start hiring new workers to meet the new demand. And to get to Economic Growth, business's have to make more money, more money then they have in a long time. And then realize that they are getting swamped by new customers in the market. And need more workers to meet the new demand, as well as raise the hours of their current staffs. So Tax Cuts like a Payroll Tax Holiday for both employers and workers, as long as that revenue is returned to the Trust Funds. Is a good first step, as well as what I would call a Consumer Tax Credit, where people would have to spend that money. Lets say within a few months and they wouldn't be able to put that money in the bank. Or pay down debt but spend that money on goods like I mention earlier.
One reason why people aren't spending money, is again because they are worried about losing their jobs. But also because they are drowning in debt. So for these people to start spending money again, they need to get out of debt. They need to pay down their debt, so they have money to spend. So what government can do here, is give people who weren't irresponsible with their money. But are debt for no fault of their own, their wages were slashed at work. They are unemployed and ran up huge Credit Card bills to get by. The value of their homes sunk because the crash on Wall Street etc. Give these people the money to pay down their debt or pay off their debts for them. By getting the Financing of their Mortgages Restructured and then give them additional credit to spend. Once they are out of debt and can afford to spend money.
We can't get our economy going again and creating jobs with strong Economic and Job Growth. Until we get Consumer Spending going again, which would lead to strong Economic and Job Growth. And a big reason why so many people aren't spending right now, is because of their own Personal Debt that they face.
Click on the link of the blog to see a video about Personal Debt in America