Why Aren’t We Buying More Stuff?

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So what’s wrong with the economy? Weak consumer demand seems the most likely candidate, and Karl Smith usefully points out that looking at the Personal Consumption Indicator, which has recovered fairly decently since the recession, doesn’t really give you the whole story on this:

Ironically Real PCE does not actually measure consumer spending. This is because to make the metric consistent it has to include implicit spending. Things like the rent that you pay to yourself. Things like the medical bills that Medicare and Medicaid pay on your behalf….Those things, however, are not fungible using cash. It doesn’t matter what is happening to the relative price of potatoes [if] you can’t spend Medicare dollars on them. Thus the pool [of] goods purchased with cash moves separately from the pool of goods either purchased on your behalf by the government or consumed implicitly.

Instead he suggests looking at retail sales, which haven’t yet returned to their 2008 peak. But why?

The straightforward explanations for this are either that people are optimally choosing to consume more leisure and fewer goods and services — that is, we are in the midst of a Great Vacation. Or, that something is preventing people from purchasing as many goods and services as our society is capable of producing. Since the former strikes us as so counter-intuitive, we fall back on explanations for the latter…..At certain times, for reasons we don’t completely understand, people suddenly start buying fewer things than we are capable of producing.

Hmmm. In one sense, the reason we’re buying fewer things is mysterious, but in another it’s not: it’s because we don’t have enough money. The NGDP targeting folks would probably tell us to look at nominal disposable income, and if you do that you see that we’re something like a trillion dollars under the trend growth rate of the last decade. The Fed could do something about that, but it’s chosen not to. So the nickel version looks like this: less money –> less demand –> less hiring –> more unemployment –> less money. Rinse and repeat.

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WE CAME UP SHORT.

We just wrapped up a shorter-than-normal, urgent-as-ever fundraising drive and we came up about $45,000 short of our $300,000 goal.

That means we're going to have upwards of $350,000, maybe more, to raise in online donations between now and June 30, when our fiscal year ends and we have to get to break-even. And even though there's zero cushion to miss the mark, we won't be all that in your face about our fundraising again until June.

So we urgently need this specific ask, what you're reading right now, to start bringing in more donations than it ever has. The reality, for these next few months and next few years, is that we have to start finding ways to grow our online supporter base in a big way—and we're optimistic we can keep making real headway by being real with you about this.

Because the bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. The only investors who won’t let independent, investigative journalism down are the people who actually care about its future—you.

And we hope you might consider pitching in before moving on to whatever it is you're about to do next. We really need to see if we'll be able to raise more with this real estate on a daily basis than we have been, so we're hoping to see a promising start.

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