Stephen Roach: The U.S. Consumer is Hurting

“Don’t count on the American consumer to drive this economic recovery, according to Stephen Roach, a senior fellow at Yale University’s Jackson Institute of Global Affairs and former chairman for Morgan Stanley Asia.

Some say falling unemployment, rising home values and record stock prices mean consumers are back spending.

Nonsense, Roach writes in an article for Project Syndicate. The American consumer is definitely not OK.

Consumer demand has been its weakest since World War II, rising at an average annual inflation-adjusted rate of just 0.9 percent since 2008, a “massive slowdown” from pre-crisis growth of 3.6 percent.

Household consumption represents 70 percent of the U.S. economy, so anemic consumption has cut 1.9 percentage points off gross domestic product growth, Roach says.

“Look no further for the cause of unacceptably high U.S. unemployment.”…”

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