According to the article, Leonhardt's major argument is that the great consumer bust served as the primary impetus for the great recession.
"The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago," says Leonhardt as a concrete example. Another illustration is the same period's sales record for ovens and ranges, which were the worst since 1992. (Attanasio ,2012 )
The fact that I am now deeply in debt as a result of splurging has a direct effect on me. Given that credit card use is possible, I have been tempted many times to purchase items that do not attend to the primary needs. It eventually led to debts since I had the capacity to purchase items so often.
Question 4.
I strongly agree that consumer bust would happen if the government offered a good deal or agreement on the table with businesses e.g. cutting back taxes on business that are creating employment opportunities. Based on James (2013) study, he postulated that such policies or deals would encourage investors to capitalize on such favorable opportunities and more people to venture into businesses. Consumer spending and debt will enable the economy to grow because global investors view it as a promising and auspicious economy.
I also concur that most contemporary consumers do not prefer debts because they do not find necessity in purchasing of new item every so often. According to Meyer (2013) consumers do not prefer debts is accredited to the fact that they are running out of money and they are trying to recuperate their depleted savings. Another reason is the modern consumers are profoundly not dependent on debts such as use of credit cards.
