Americans are afraid to spend money because "they're still woozy from the financial crisis" and the Obama administration "isn't giving people any reason to be confident about the future," Tom Hutchinson, senior editor of the Newsmax newsletter "The High Income Factor," told Newsmax TV.
Consumer spending was flat in April — the weakest performance in three months — after a revised 0.5 percent increase in March, the Commerce Department reported Monday.
The March advance had been the biggest gain since last August. Personal income rose a healthy 0.4 percent.
"It's just not the same consumer there was 10, 20 years ago for a couple of big reasons," he told “Newsmax Now.”
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"One is demographic. The population's getting older beyond the peak consumption years. A lot of people are behind on their retirement savings and money that normally went to a convertible or a vacations now going into the IRA so you have that problem," he said.
"Number two, there's also a hangover from the financial crisis. People took generations to get over the Great Depression so they're still woozy from the financial crisis," he said.
"And frankly, beyond that, this administration isn't giving people any reason to be confident about the future."
Meanwhile, the economic contraction in the first quarter is also a concern. The government on Friday
slashed its gross domestic product estimate to show it shrinking at a 0.7 percent annual rate instead of the 0.2 percent growth pace it estimated last month, Reuters reported.
A larger trade deficit and a smaller accumulation of inventories by businesses than previously thought accounted for much of the downward revision. There was also a modest downward revision to consumer spending, Reuters reported.
"The economy was bad in the first quarter and the second quarter is not going to be great," he said.
"We had been picking it up to a level that was good for this recovery. The economy got walloped by the rising dollar. It really hasn't overcome that yet, but in the second half, the advantages of low oil prices and a higher dollar will eventually seep through and we'll see better performance then.”
About Tom Hutchinson
Tom Hutchinson is a member of the Newsmax Financial Brain Trust. Click Here
to read more of his articles. He is also the editor of The High Income Factor. Discover more by Clicking Here Now.
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