Recession and Unemployment
We should spend. However, we need to spend wisely. This is more like the last depression then the last recession. What got us out of the depression was a world war. An increase in demand is not going to come from the consumer. Unlike recent recessions, the average consumer's net worth has significantly dwindled because of the perspicuous fall in the value of his home , around 40%, with no sign of it recovering soon. This 40% drop in home values results in at least a 60% drop in net worth because of the excessive use of leverage. Further, unlike the previous depression our government is much deeper in debt because of the burden of additional social programs and two wars going on. This occurrence has caused the average American to be more frugal. He is not anxious to spend like yesterday. Further, even if he was, his ATM called a second mortgage, is no longer available to him.