by Llewellyn H. Rockwell
Sometimes the bad news is the good news. So it is with the report that retail sales are down by 0.1 percent in July, the sharpest drop in many months.
Why good news? It means that consumers are starting to cut back. They could be going into less debt. They might be saving more. They are being more careful about long-term plans pending short-term trends.
These are all preconditions for recovery. It’s only bad news if one adopts the crude theory that economies are sustained by consumer spending. The truth is nearly the opposite. Consumer spending is the final payoff for the less visible foundation of growth, which is real saving and investment – that is, making the choice for the future over the present. What declines in retail spending indicate is a coming to terms with reality.
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