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Chilly outlook after hot summer

Gas vaults over $4 towards $5, Lehman Brothers signals more financial market issues, and last week's jobs report suggests consumer spending will slacken quickly once tax rebate checks are cashed. Some on Wall Street may continue to look at technical numbers and see slow growth. But on Main Street the...

By Jonathan D. Miller | Updated on June 09, 2008

Gas vaults over $4 towards $5, Lehman Brothers signals more financial market issues, and last week’s jobs report suggests consumer spending will slacken quickly once tax rebate checks are cashed. Some on Wall Street may continue to look at technical numbers and see slow growth. But on Main Street the stress-o-meter registers extreme readings, sort of like temperatures in the Northeast this week. One guy I know just went on medication to calm nerves, another learned his severe toothache results from grinding at night. These aren’t subprime mortgagees. They are millionaires on paper with lots of debt, stock market losses, and diminishing prospects for year-end bonuses.

The gloomy jobs report reinforces outlooks that predict more people will face debt crises soon. As noted repeatedly here, many Americans not only over leveraged on homes and second homes, they must also cover car loans, student loans, and credit card payments. Those tax rebate checks won’t go very far in this debt morass and as long as people continue to lose jobs — defaults and bankruptcies have nowhere to go but up, and housing prices will slide some more too.

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