Experts Warn of Consumer Spending Tumble

Even as the economy continues to show signs of recovery, many financial experts have begun to sound the alarm that consumer spending may soon take a sharp and dramatic fall, hampering economic recovery in the long run. Various factors, such as rising unemployment and unpredictable wages, have combined to create this precarious situation.
 
A recent report by the Commerce Department has shown that wages and salaries have fallen 4.7 percent in the last year, signaling the largest drop in the 49-year history of the report. According to the report, the Obama administration’s steps to help people through the economic crisis have only managed to create a façade of recovery, obscuring the true impact of the financial meltdown.
 
Among those worried about consumer spending are various prominent economists, including Nobel laureate Edmund Phelps, and several Federal Reserve Officials. According to Phelps, the crisis is so severe that consumers may need as long as 15 years to get their finances back on track after declining home prices, falling stocks, and rising unemployment finish ravaging families’ finances. 
 

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