Robert J. Samuelson writes in the Washington Post...and it's clear he's so out of touch with ordinary Americans that he's not aware a) we're already feeling the pinch, b) we're all concerned about our retirement, c) the impending bird flue epidemic is going to shake things up so randomly that we can't sort it out, and d) even we get that the long term trend is to erode our standard of living. He says:
This need not be a disaster. On paper, the economy could compensate in many ways: more exports and fewer imports (much U.S. consumer spending went to imports); stronger business investment; extra government spending for hurricane rebuilding. Britain's recent experience could be suggestive. Two years ago home prices were soaring (roughly 20 percent annual increases), interest rates were low, homeowners were extracting huge cash profits (equal to 9 percent of disposable income at the peak) and consumer spending was high, says economist Howard Archer of Global Insight in London. Worried about inflation, the Bank of England raised interest rates. Consumer spending, economic growth and home price increases (now about 3 percent annually) all abated. Unemployment has edged up; still, there's been no recession.
The fading of America's wealth effect, should it occur, might be equally dull and benign. But there are grimmer possibilities. One is that many adverse forces are now converging: higher energy prices, higher interest rates and debt payments, higher inflation, falling wealth gains. None matters much alone, but "their combination is creating more consumer risk," writes Susan Sterne of Economic Analysis Associates. For two decades free-spending American consumers have anchored the U.S. and world economies. If they no longer play that role, it's an open and worrisome question who will.
Until we have disincentives for corporations to import, and we have incentives for education, manufacturing, and socialized health care, yeah, its downhill from here, with a bullet, especially if the Fed raises rates to cut our gas consumption...