July 2, 2001

Consumer Spending Is Not Enough

Despite a 5 percent climb in consumer spending in May, the rest of the economic news is not good, with slower growth in personal income and a savings rate that continues to fall. Consumers are not ready to weather the serious economic storm that is coming.

Just take a look at the dark clouds looming on the horizon: Companies are having the worst earnings season ever -- just today, both 3M and Eastman Chemical announced that second-quarter earnings won't meet expectations ... One in three companies plans to cut capital spending over the next year ... Industrial production is slumping ... Consumer and corporate debt are at record levels ... Layoffs continue, with a recent survey showing that 25% of companies plan to eliminate jobs next year. All of these factors indicate we are headed toward recession.

Batten down the hatches, the storm's about to hit!

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