The reality of the changes in consumer behavior

Consumers are going to be watching how much they spend because they are afraid of loosing their jobs.  It’s more about needs than wants and making purchases that help consumers feel better about themselves.

There is a disconnect between the fortunes of American companies, which are doing quite well, and American workers, most of whom are earning a lower hourly wage now than they did during the recession.

Meanwhile, companies are flush: American firms generated $1.68 trillion in profit in the last quarter of 2010 alone. Many firms are not putting their next factory or R&D center in the U.S. when they could put it in Brazil, China or India. These emerging-market nations are churning out 70 million new middle-class workers and consumers every year. That’s one reason unemployment is high and wages are constrained here at home. This was true well before the recession.

From 2000 to 2007, the U.S. saw its weakest period of job creation since the Great Depression. Eventually taxes in this country are going to have to increase if we want to close the deficit.