If we have seen a pendulum shift from the ever expanding consumer spending and associated credit of the last few decades to a more stable, consumer saving and living within his/her means does that mean the economy is in a constant recession? The formal definition of a recession is one where there is negative GDP for two quarters in a row. In a society where consumers are saving more, the companies that produce products will produce less. However not less quarter to quarter. Suppose we have an economy where the general consumption level stay about the same year after year.
Companies will have to adapt, and in fact many of them already have. They will grow profits (which really is the point after all) by becoming more efficient and finding new markets. Competition will increase and weak players will be driven out. We will also see an excess of labor that will have the effect of driving certain labor rates lower, especially those where required skills are minimal or easily obtained. Those who have skills in more specialized areas will of course be in better shape. If labor rates decline or stabilize, this will make certain domestic products more competitive with foreign ones.
Of course areas where we could see growth is in the domestic and renewable energy markets. Also, if American products get more competitive we may see growth in exports to the growing demand from developing countries.
On the down side is the fact that without growth and very significant growth, the drain of the deficit will be greater and reduce future spending. Of course the answer is to reduce spending and increase revenues in the smartest possible way. Simply, subsidies to those who don't really need them should be eliminated and fees should be charged for services provided. Programs such as Social Security and Medicare need to be made self sustaining over the long haul.
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