NEWS AND COMMENTARY
June 26, 2001
Consumers Are Next Domino
The economy seems to be divided into two groups -- the fizzling business sector and the sizzling consumer. But in reality, these two groups represent what is and what's yet to come.
The business sector, especially manufacturing and high-tech companies, is in a slump that shows no signs of turning around. Businesses have laid off thousands of workers, slashed production, and cut capital spending, and, still, they have seen their earnings plunge.
Consumers, on the other hand, are still spending -- digging themselves into a black hole of debt to buy houses at cut-throat rates.
But the consumer side is showing signs of caving. Spending on items such as cars, clothes, and computers have dropped significantly. Plus, we told you yesterday how the debt burden will soon become too much for many consumers to bear, especially when they begin to feel the impact of layoffs. They will be forced to slam shut their wallets. And those are just the fortunate ones. Others, unable to climb out from under the debt, will be forced into bankruptcy.
The economy has a rocky road ahead to recovery, and recession is still a roadblock that's standing in its path.
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