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http://www.nytimes.com/2008/01/14/business/14spend.html?hp

But not everyone is splurging. Jinal Shah, 22, a college senior in New York, said she wanted to buy the popular Nintendo Wii video game system as a gift for herself this holiday season, but had second thoughts because of the $250 price tag. She ended up not purchasing it.

“You have to make choices,” she said. “I get the Wii, or I go out more. I am just much more aware of the tradeoff now.”

Well, I guess it won't be a real recession till Time business reporters actually interview someone who lives in the real world and is trading off eating and paying for gas to commute to a minimum wage job.
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I'm confused Loki, which happens far to frequently, but would you explain this sentence from that article?

"Even in tough economic times Americans rarely reduce their consumption, preferring instead to slow the growth in their spending"

How can one reduce consumption if they aren't slowing their spending?
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"Even in tough economic times Americans rarely reduce their consumption, preferring instead to slow the growth in their spending"

How can one reduce consumption if they aren't slowing their spending?


It is a confusing way of putting things (I remember when reporters for the Times were expected to write competently).

It means that even when consumers are hurting financially, usually the total $ they spend continues to increase, it just doesn't increase by as much as usual. So, for example, if last year I spent $33,000 on consumer items and the year before I spent $30,000, that was a 3% increase. If this year I spend $34,000, that's still an increase, but less than 1%. That's what usually happens in an economic slowdown or even mild recession. If I spend $32,000 in 2008, that's actually less than I spent in 2007, which is highly unusual and happens only when recessions are really bad.

Of course, mostly this is technical gobbledygook. What matters more than official measures of recession is whether we are looking at growth before or after inflation and patterns of consumption. If I'm increasing my spending this year, but all of the increase is for food and fuel, I'm cutting back on buying a Wii or hanging out at Starbuck's or the bar.
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Got it! I didn't think I was "that" blonde. Personally, we are cutting back, groceries with a list, watching how much we drive if we can, thermostat carefully monitored etc. Checking insurance rates upon renewal, and cutting down on the eating out.
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Okay, I suppose this one is really way off topic, but seems like a metaphor:

http://www.nytimes.com/aponline/business/AP-Costs-More-Tastes-Better.html

Apparently, wine tastes better if you charge more for the same bottle. Isn't that pretty much the essence of our economy?
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It means that even when consumers are hurting financially, usually the total $ they spend continues to increase, it just doesn't increase by as much as usual. So, for example, if last year I spent $33,000 on consumer items and the year before I spent $30,000, that was a 3% increase. If this year I spend $34,000, that's still an increase, but less than 1%. That's what usually happens in an economic slowdown or even mild recession. If I spend $32,000 in 2008, that's actually less than I spent in 2007, which is highly unusual and happens only when recessions are really bad.

Loki,

What happened to your math skills? Usually, you are on the money (honestly, the pun was unintentional at first, but I left it here after catching it) with these types of things.

When the consumer's spending went up from $30K to $33K, they increased consumption by 10%. The next year, the $1K increase is about a 3% increase in spending. The point you were trying to get across is still valid, but the devil is in the details...

Acme
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What happened to your math skills? Usually, you are on the money (honestly, the pun was unintentional at first, but I left it here after catching it) with these types of things.

Ouch! Apparently I have been influenced by the financial math used by politicians, Wall Street, and financial advice givers, where 2 plus 2 does not equal 4 and where $3000 divided by $30000 is 3%, which I believe is how they do CPI-U.

Or maybe, my brain has reached to point I need a calculator to divide 3 into 30.
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