I just happened across a headline in a respected financial publication offering a bit of guarded cheer on the economy. It said that recent gains in the stock market might help boost consumer spending, but cautioned that the effect may be mostly limited to the wealthy.
Folks, this kind of Keynesian claptrap might have made sense in 2009, but where’s the case demand-side economics is what’s needed in 2022? How in the world would more consumer spending help what ails the economy now? Even the most casual observer taking an occasional peek out of his cave can’t have missed the news about supply chain constraints, let alone supposedly professional financial journalists. It’s impossible to have covered the inflation story over the past year without having encountered its connection with historically robust demand for everything from consumer goods and services to workers. Demand for housing, used cars, durable goods, discretionary … none in deficit. The Federal Reserve has even cited excess demand as a transmission mechanism for the inflation that bedevils America.
There may be a lot of things ailing this economy, but lack of consumer spending isn’t one of them.