By Thomas Hinton
This week, the Federal Reserve lowered its 2012 recovery expectations stating job growth and the much anticipated business rebound wasn’t going to happen. Chairman Ben Bernanke announced that despite historically low interest rates, fewer jobs will be created than expected and the U.S. economy will only grow by 2.2% this year. His revised projections are not good news for consumers or incumbents.
Consumers had high hopes that the American economy would begin to rebound after five dismal years, but that won't be the case in 2012. Why not?
Blame it on Wall Street, the Congress, President Obama or even the European mess – but, regardless of whom we blame, the stark reality is consumers have lost faith in the political process and those institutions that were supposed to protect us from the economic calamity we’ve suffered through since 2007. This is more than just a political or economic crisis, it's an institutional breach of faith.
Furthermore, the economic game has changed. Nobody seems to have any meaningful answers or long-term solutions. We've not heard anything to date from President Obama or Governor Romney that suggest otherwise. This is why consumers are unwilling to loosen their purse strings and open their wallets. Until we can see positive trends in job growth, a solution to the housing crisis and the reappearance of Main Street shops, consumers will be content to sit on the sidelines and not spend their limited funds. While there are a few notable exceptions to consumer spending such as paying off credit cards, replacing the old clunker with a new or used car, taking a family vacation at a nearby destination and taking on student loan debts, for the most part, consumers are not willing to spend money on major purchases that can wait.
And, let's not forgot, that America’s economic troubles are being exacerbated by our "too big to fail" banks that once again have invested heavily in questionable foreign investments. Economically speaking, the world looks like a row of thin dominoes just waiting for an ill wind. If Greece, Spain, Italy or Ireland fails, we could all tumble into the economic abyss. As silly as it sounds, this unwelcome global investment scenario appears to be the price we will pay for propping-up irresponsible nations and "too big to fail" banks that want to play in the big leagues of global economics.
And so, as John Mayer’s song lyrics goes, “We keep on waiting, waiting on the world to change.” The only problem is the world is not changing. It hasn't learned its lessons from six years ago and we continue to make the same economic blunders over and over again. Is it any wonder, our economy remains flat and consumers are frustrated?
Given America’s current economic struggles and the dismal performance of our elected leaders to improve our plight, there's a good chance consumers will rise-up on Election Day and "vote the in's out!" We're frustrated with Washington's continued hype and we're tired of waiting for a recovery that might never come. Certainly not if we stay the course.
About the Author: Thomas Hinton is president of the American Consumer Council, a non-profit consumer education and advocacy organization with over 128,000 members in all 50 states. Contact: firstname.lastname@example.org