Personal Finance Advice

Recent economic data shows only a slight slowing in consumer spending but those numbers are misleading.  Higher prices are to blame for this, so while Americans may be spending the same amount of money, they are getting much less for their dollars than they did a year ago.

While some of it’s inflation, the weakness in the dollar also plays a large part in this because of the American consumer’s propensity for purchasing imports.  With the Fed forced to slash interest rates to cope with the growing credit crisis, the situation is not expected to improve anytime soon.

Americans are feeling the strain, especially in states like California and Florida.  With foreclosure rates at three times the national average, the housing bust has hit these regions especially hard.

Consumer confidence is at the lowest its been in years and we aren’t even technically in a recession yet.  People are having to spend a larger percentage of their disposable income on necessities like food and energy, whose prices have soared over the last year.

Many retailers are struggling as more and more Americans grow worried about inflation and job security.  While the economic stimulus package will provide a little relief, it is becoming increasingly unlikely that we will be able to spend our way out of this economic downturn.