Boo! Okay, that didn’t scare you. But hopefully you got your fright on this Halloween – be it haunted houses, creepy costumes, creepy people, or just watching Scream. That Northeastern snowstorm was pretty scary – the movie “The Day After Tomorrow” comes to mind. Global warming be damned. Apparently everything around us is just now suddenly “scary”: the news is running stories about the “scary” economy, “scary” houses (though that should be saved for the “scary” drop in home prices), and even “scary” celebrity Halloween costumes (Heidi Klum has outdone herself yet again, what a “scary” surprise). If we believed everything we saw and read, we would be right to stay inside, lock our doors, and hope November is a little less “scary”.
But that’s not how we roll. Good for you for not letting the attempts to spook you get you down. We went out in full force for Halloween, witches, pirates, “slutty” pumpkins (or anything really) and all. We may have even outdone ourselves, which is impressive considering last year’s numbers. According to some fun (yes, fun) statistics, last Halloween there were 41 million trick-or-treaters covering 116.7 million eligible trick-or-treating stops (homes). And we love getting into the seasonal spirit: last year we ate an average of 24.7 pounds of candy per person (during the course of the year) and pumpkin production totaled 1.1 billion pounds! We are serious – go big or go home (and lock your doors).
Certainly we aren’t going to let the economic naysayers tell us what to do either. In what turned out to be fairly good news in econoworld last week, our economic output increased in July-August-September by 2.5% over the previous 3 month period, after very weak gains earlier in the year. While still quite lackluster compared to other post-recession “recoveries”, this news was good in that our output – after adjusting for prices –finally passed pre-recession levels (yes, it actually took this long). You have yourselves to thank: consumer spending led the growth spurt (hey, we have a lot of candy to consume this year). Congratulations, the economy is growing again. It’s easy to conclude our wallets will soon join our stomachs in the happy parade.
Not to be a debbie-downer (or a villain, or goblin, or whatever name Halloween gives this role), but this might be a bit optimistic. Growth fueled by our consumption, given the reality of our finances, really isn’t sustainable long-term. On Friday, other data showed our spending in September was up and away: after adjusting for prices, our spending was up 0.5%. Meanwhile, for the third month in a row, our “real” spending money (disposable income after adjusting for prices) was negative – our available funds are decreasing! Where is this spending money coming from? If we aren’t making it, we are borrowing it from somewhere. For many of us, it’s our savings. In a worrisome trend, savings continued to dwindle away, down $60 billion in September, to $419 billion, just 3.6% of our income. Last year we had almost $600 billion in savings.
Low savings, high spending, and high debt is a risky combination. We’ve been using this formula for a long time, but it also dug the big economic hole we can’t seem to fully get out of. If anything is going to “scare” us this year, that seems as good (if not better) a candidate as anything else. Boo!
(Census Bureau, Bureau of Economic Analysis)
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