Consumption Trends of Today's Economy

According to Gallup, recent consumption has risen since last year. Recent trends of the economy in the past few years have led many to claim this as the worst state of the economy since the Great Depression. If that is the case, it's interesting to observe differences between the way consumers of the Great Depression responded in their time, versus consumers of today. Following the stock market crash of the Great Depression, consumption fell, forcing interest rates down due to a drop in demand for money liquidity. This article explains that despite consumers having low opinions of their financial stability--72% have said that they were cutting back on spending--consumption has actually risen by 5% from the same month of last year. Though small, this increased spending should be raising the interest rate, forcing investment and borrowing down: the opposite of our class's hypothesis for the effect of the stock market crash on the depression of early years. One begins to wonder if this difference in consumer attitude, when coupled with the Fed's actions, could be one reason this recession is not completely explainable by current Macroeconomic models.

http://blogs.wsj.com/economics/2011/11/22/consumers-may-be-spending-more-but-theyre-not-happy-about-it/?mod=WSJBlog&mod=marketbeat