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The Conference Board said on Tuesday its index measuring consumer sentiment tumbled to 38.0 in October, down from 61.4 in September and the lowest reading since the index was first published back in 1967.

Some other notable statistics about the US gloom–

  • Housing prices are down 16.6%
  • Stock prices are down 25% in October alone
  • Consumer debt totals 2.56 trillion USD

The real news here is that consumer spending depends largely on consumer confidence, and investment spending will not happen without the promise of a decent return. We have a better understanding of things–I think–than people did during the Great Depression, but if people horde their money for a long time we will have a hard time recovering.

The Great Depression gave rise to Keynesian Economics. I wonder if a new depression would bring a new view of economics. Current models are rightly criticized for a few things, like implying that income is the end-all measure of welfare, encouraging policy linked to growth, even if society suffers in the end.

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