Tuesday, August 19, 2008

Business Trickle Down Short Term Profits End, No One Left to Spend Money

Oh my God, trickle down economics isn’t working. There go the profit margins. Corporate interests have squeezed consumers so dry; the needed product price increases are essentially pricing people out of the market.

Here’s the sad reality check for Grover Norquist and other the troglodytes who are pushing the myth of a free market system (check the book No Free Lunch by David Cay Johnston), as reported by the NY Times:

"American businesses faced the biggest annual jump in wholesale prices in 27 years last month, just as the stumbling economy caused consumer spending to drop."

The challenges are expected to make it more difficult for businesses to raise prices and maintain profit margins. Businesses can raise retail prices and risk losing customers who are already squeezed by the downturn. Or they can eat the cost of more expensive goods and lose profits.

Gee, conservative economics appears to be preventing businesses from make more money. Can you say “unintended consequences?” Is it just a momentary upturn in prices?

“The report presented the specter that consumer prices could rise higher in the fall and winter. Inflation reached a 17-year high last month, according to the Consumer Price Index.”

Looks like our race to the “wage bottom” happened a little faster than investors were counting on. Will the next step be abandoning the American consumer market for growing foreign countries?

Consumers were led to believe that lower priced products would be here forever. Just like many of us thought gas wouldn’t go above 35 cents a gallon in the 60’s.

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