Our outlook for the economy is borderline apocalyptic. We have this massive consumer infrastructure that has to get unwound and an economy that has come to depend on consumer spending as its lifeline.
Consumers represent more than 70% of GDP. This is a problem. This is the problem, and no one is talking about it. Our GDP is too big for consumers to be able to sustain this much of it. Just look at the fact that consumer savings, which used to range around 7% to 8% have fallen into negative territory for the past few years. This is not sustainable. The current meltdown is helping to prove that.
Now consumers are faced with increasing employment risk and job losses, and on the horizon, we are predicting that the impact of the massive debt being piled onto the national balance sheet will suck the value out of the remaining dollars in their pocketbooks. We will only mention here that there is $40 trillion in unfunded liabilities (Social Security and Medicare that are still looming).
We cannot go on forever consuming and not producing, and it is folly to believe we can. How did we ever get into a position in which consumers represented over 70% of the GDP? We most certainly had a national leadership who were utterly asleep to what was happening.