Americans Hunkering Down as Obama Scares Them Into a Depression

I'm not talking about a psychological depression, but a financial one. Every day The One and his team come out and talk about the "continuing disaster" and how "things will get worse before they get better", and American are responding accordingly. They're hanging onto their money:

WASHINGTON (AP) -- Americans are hunkering down and saving more. For a recession-battered economy, it couldn't be happening at a worse time.

Economists call it the "paradox of thrift." What's good for individuals - spending less, saving more - is bad for the economy when everyone does it.

On Friday, the government reported Americans' savings rate, as a percentage of after-tax incomes, rose to 2.9 percent in the last three months of 2008. That's up sharply from 1.2 percent in the third quarter and less than 1 percent a year ago.

On Monday, the Commerce Department reported consumer spending fell for a record sixth straight month in December, dropping 1 percent amid worries about surging layoffs. That was slightly worse than the 0.9 percent decline economists expected.

Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.

The downward spiral has hammered the retail and manufacturing industries. For years, stores enjoyed boom times as shoppers splurged on TVs, fancy kitchen decor and clothes. Suddenly, frugality is in style.

If this country falls from a serious recession into a full depression it will be largely due to the constant drumbeat of negativity coming from Obama and his team. With nothing positive to offer the people, and a constant stream of negative news in the press, Americans would be silly to resume spending at previous levels - the levels needed to bring the economy out of its current funk.

America needs some positivity, even if it's just wishful thinking. Until Americans start to feel more confident about the economy in general and their economy in particular, they won't participate in helping create the recovery.