Ugh, horrible news for newspapers

[Richard]

http://seekingalpha.com/article/141201-first-quarter-newspaper-ad-revenues-plunge-28 Ad rev down 28%.

[jpd]

There is nothing to fear except fear itself.   (I just made up that cliche, do you like it?)

My industry is also down 30%.    Everybody is down.

So what is UP?   Consumer savings...   Consumer savings have risen from 0.000% to over 5% in the past few months.   Consumers are 70% of the American economy--  it is not big business driving our economy-- but consumer spending.    Consumers are reading all of these terrible news stories about GM, the banks, unemployment, etc.    The news media has scared them shitless with stories of 4% downturns in new orders;  with 5% increases in unemployment;  with Armageddon right around the corner....    Consumers stopped spending because of stories that do not even pertain to their lives directly.   Yet consumer spending affects the business economy more than the business economy affects them, I think.

Never in my lifetime has an American put 5% of their earnings towards personal savings.   Never before have so few (the media) encouraged so many (the public) to panic over so few percentage point drops in industries that otherwise would not have affected their lives whatsoever.

I'm NOT saying people shouldn't save their money.   I'm saying that an extra 5% of spending from 70% of our economy would sure help  to get us through a downturn when industries need new orders and new business to keep operating.

The media reaps what they sow.   Our politicians reap what they sow, too.

p.s.-  right on cue, Yahoo is advertising the worst beaches in the world for shark attacks...   affecting 0.00000029% of the public, while scaring away the other 99% of people along the way.....

       

[Richard]

Yeah, I think there is a lot of hype too, but there are also a lot of people out of work. The unemployment rate is almost 10% in the state I live in, and if you could underemployed you are talking more like 16 percent. A lot of people I know also don't know if they are going to be cut soon. Spending isn't a priority for a lot of people no because of all the uncertainty, but I again take your point, driving it into the ground with bad news story after bad news story isn't helping anything.

[jpd]

I think that was my point.   If 70% of the economy sits on their wallets, then 30% of the economy (businesses) are hit with 10-30% losses.    That results in real job losses and real people out of work.    It's the "snowball effect."

On one side you have ten years of rabid consumer spending.   On the other side you have businesses with tightening margins and constraints like Sarbanes-Oxley and other legislation which limits their ability to sell their products.

All of a sudden a 4% drop in orders puts a million people out of work, because margins are so thin that business can no longer absorb the energy costs and other costs of performing their business.   A million people out of work makes the media howl, adding fuel to the fire.   Suddenly people--  WHO HAVE JOBS-- stop spending their money, which multiplies the problem times ten.

Who is to blame for this?   Who is responsible for Economic Leadership at a time of crisis?  Dog-catchers and para-legals that we voted into positions of high elected office.....