The Huffington Post posted an article today explaining why the Dow is going up while consumer spending is going down. In Robert Reich’s post he suggests that the reason is due to the expansion of government as they are taking over what consumers could no longer afford.
“So how can the Dow be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they’re worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save.”
Follow the link for more on the state of the Dow in relation to consumer versus government spending.