The pandemic’s adverse effect on the economy demonstrated how poorly Americans were prepared for an economic downturn.
We watched lines of cars waiting for bags of food. But wait. Isn’t that a Range Rover and in the next line an Escalade? Americans live on credit and roll the dice that their future income will cover today’s purchases. America’s credit card debt is around $8 billion. I read a survey where people were asked if they received a surprise $400 bill would they be able to handle it. The majority said no. Not $4,000, but $400. I asked a financial advisor how much should we have in the bank? Take your fixed expenses (mortgage, rent, etc.) and multiply by 12. How many really do that?
What our voracious spending habits does do is spur the economy. Retail expands to meet the demand. Our government is printing money as fast as possible and sending it out as a stimulus package — not to be saved but to be spent to keep the economy humming along. So in the end do we save to keep ourselves out of those food lines or spend to keep the economy afloat? Is our economy just a giant ponzi scheme? Hopefully we will never know.