Consumers Not Buying... Um, Anything

The US consumer has “gone from being the world economy’s greatest strength to its Achilles’ heel,” writes David Leonhardt in the New York Times. Just as Wall Street’s turmoil begins to calm, consumer spending—an economic mainstay—has gone into hiding, helping to accelerate General Motors’ tailspin and sending messages to retailers like newly bankrupt Circuit City that times are changing.

Americans have been spending some 99% of their income in recent years, but experts are guessing savings rates could rise to 3% next year as worried consumers pull back from their spending spree. That’s a good thing for individuals, but that 1% drop in spending could cost the economy some $400 billion in revenues it sorely needs. (More financial crisis stories.)