New figure show that even with a small gain in income, Americans are spending less and less, due to the gloomy outlook of the economy. The Commerce Department reported that household in come only had a small 0.2 percent gain, but consumer spending had sharp drop; of 0.3 percent in the month of September. Figures also shows that the U.S economy shrank 0.3 percent during the third quarter. That combined with the current Bush administration hinting to automakers and other industries that they might not be qualified for the government $250 billion stock purchase program. but they could be the benefactor of a separate government purchase program in which the government plans to spend $100billion in purchasing stocks in banks to remove the bad assets on the bank's books, such as bad auto loans.
With consumer confidence dropping fast and hard times ahead, Federal Reserve Chairman Ben Bernanke warned the government that whatever system is set up after the government take over of mortgage giants Fannie Mae and Freddie Mac, that this system much have better safeguards to keep the system functioning in times of stress.
"The boom in subprime mortgage lending was only part of a much broader credit boom characterized by underpricing of risk, excessive leverage and the creation of complex and opaque financial instruments that proved fragile under stress," Bernanke said
With the holiday season coming in stores are bracing for lowest sales. And Economists expects Armenians to further cut spending and it looks like hard times ahead.
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