NYT: The Era of Consumption Is Over - Dying of Consumption - by Stephen Roach

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The Era of Consumption Is Over - Dying of Consumption - by Stephen Roach

"It's game over for the American consumer. Inflation-adjusted personal consumption expenditures are on track for rare back-to-back quarterly declines in the second half of 2008 at a 3.5 percent average annual rate.There is a deeper, potentially positive, meaning to all this: Consumers are now abandoning the asset-dependent spending and saving strategies they embraced during the bubbles of the past dozen years and moving back to more prudent income-based lifestyles. This is a painful but necessary adjustment. Since the mid-1990s, vigorous growth in American consumption has consistently outstripped sub-par gains in household income. This led to a steady decline in personal saving. As a share of disposable income, the personal saving rate fell from 5.7 percent in early 1995 to nearly zero from 2005 to 2007.