There are roughly 15 million people unemployed in the U.S., and as many as another 15 million are underemployed (working shorter hours) or have given up looking. The numbers say that pretty much everybody has significantly reduced their spending.
And that brings us to what economists call The Savings Paradox. The paradox is that it makes perfect sense for individuals to cut back on their spending, but since the economy is about 70% driven by consumer spending, what is good for individuals is not good for the whole economy.
So we are in great need of some new source of jobs to get people back to work so they can resume spending and drive the economy into a new expansion phase. For decades now, all the evidence says that the overwhelming source of NEW jobs is small businesses. The question becomes what has this administration done to support start up small businesses? And the answer is NOTHING!!
The primary thing that the government has done about the recession is to transfer huge amounts of your money to coffers of Goldman Sachs, and to a much lesser extent, other Wall Street banks. The result of that action has been to REDUCE the amount of lending done by these financial monsters.
Oh yes, they also transferred billions of dollars to new car dealers to clear out their lots. What has actually happened is that 2010's auto sales have been moved forward to 2009. What a stupid stunt!
Back to the real problem. The recession can not end until people go back to work. Since most of the jobs that were lost are not coming back, it is vitally necessary to create new jobs. And that means entrepreneurs starting new businesses, but the government is doing nothing to support that activity. In our new book, The Great Recession Conspiracy, we show exactly how to make this process work. Read all about it at scribd.com/doc/16864582/The-Great-Recession-Conspiracy.