Idle Chatter: Average American Barely Holding On?

Yesterday while at the gas station, noticing several others filling up with -- or at least buying some -- gasoline, all of whom appeared to be average Americans, making average income, not driving really fancy cars, but cars one now expects to see in America, I began to think that, "you know, these folks probably were able to handle $4.00 gasoline for the first few weeks, maybe even the first few months, expecting that over time the price would fall again, but the price hasn't fallen all that much, and it's now been many months, a year? Longer? And I bet a lot of average Americans are truly just hanging on, financially, due to any number of reasons, but certainly the price of gasoline is not helping."

Then today, the top story at Yahoo!Finance: Americans cut spending for the first time in 20 months.

Americans cut back on their spending in June for the first time in nearly two years and their incomes grew by the smallest amount in nine months, a troubling sign for an economy that is barely growing.

Consumer spending dropped 0.2 percent in June, the Commerce Department said Tuesday.

Some of the decline was caused by declining food and energy prices, which had spiked in recent months. When excluding spending on those items, consumer spending was flat.

The article mentions that high gas prices and unemployment have squeezed consumer spending.

It looks like Americans can hang on for about two years when the economy turns. That's an interesting number for me; every time we moved to a new assignment in the military, it took me about two years to recover financially.  Our assignments averaged about 2.5 years over the course of my military career, until I was able to "homestead" at my last assignment. But I digress.

And, just yesterday, I linked this story: the double dip recession is already here.

I posted this on June 19, 2011, with updates periodically, and a major update on July 29. But this was the June 22, 2011, update:

June 22, 2011: The comments to this article are very interesting. It is very, very scary that the Fed chairman was unable to instill any confidence in the investing community. It is clear that he sees a second lost decade, and most of it revolves around lack of a sound energy policy.

Brutally honest, Bernanke admitted that he had no clue what was actually causing the current fragility in the U.S. economic recovery.  While the FOMC statement assigned blame outside of the U.S., pointing at Japan along with rising food and oil prices, Bernanke was put on the spot by a reporter who noted the inconsistency behind that explanation and a lowering of long term forecasts.  Bernanke took the hit, admitting only some of the factors were temporary and that he didn’t know exactly what was causing the slowdown, but that it would persist.  “Growth,” said Bernanke, “will return into 2012.”

I still feel strongly that policies at the top could have prevented this, but I'm probably naive and in the minority.