Structural Changes To The US Economy

As consumers decrease their spending and increase savings, the output (GDP) of the economy will shift. Since consumer spending makes up a large percentage of the GDP this shift will have a profound impact on the US economy. The decrease in the consumer portion of the economy will have to be offset in other ways if GDP is not to fall. This is what is going on with the Obama administration currently. They are looking to replace the large drop from the consumer portion of the GDP.

Even as the government shifts to higher spending working to offset drops in other parts of the GDP the tectonic structural shift will affect the US economy for a very long time. Consumers mindsets are rapidly changing and their spending habits are moving away from discretionary items to only the necessary items. Credit which has flowed smoothly for years has slowed as financial institutions continue to thoroughly check their potential customers. Even if credit is full restored the events have been so mind-altering that the consumer will likely continue to reign in spending and use debt at a much lower levels than prior years.

Just some thoughts which will be continued in the near future.