Weak Consumer spending in US will impact world growth

Weak consumer spending will last for years

Ed Harrison at Credit Writedowns about structural fall in consumption patterns for US consumers:


Retail sales in the United States have fallen 10% since peaking in November 2007. Much of this decline represents a permanent fall in consumption by overly indebted American consumers.


The fall in consumption is due to permanent loss of spending capacity of US consumers and their high level of debts. US economy has was contributed about third of global GDP. Close to 70% of US GDP was composed of consumer spending. US consumer spending contributed a significant portion of global GDP. With US consumer spending remaining at low level global growth will subdued for years.


The fall in spending will affect
1. Export based economies
2. Commercial real estate
3. Banking system

Indian economy has to look for new sources of growth in this new era.