Christmas spending: Who can afford not to cut?

European Union consumers will be very careful with their Christmas gifts shopping lists this year, says an in-depth analysis of Wall Steer Journal’s Europe Edition, based mainly on data from a relevant survey of Deloitte LLP. With unemployment reaching unheard before levels above 25% in Greece and Spain and skyrocketing in other weak EU economies, the ranging free economic crisis leaves only the German consumers untouched this Christmas season. Unfortunately, consumer spending cuts, through the multiplier effect, later on in the New Year will heat back consumers themselves, this time as workers or job seekers. Consumption is by the far the powerhouse of economic growth and cuts in it are more than certain, to have negative effects of overall production and incomes. However consumers do not have other alternative, than cutting their spending, to counter the threats on their income and job prospects. That is why they become even more careful, when it comes to spending on gifts. Lower consumption however leads to lower investments. Very simply because the business sector is obliged to also cut back expansion projects or even trim down regular up keeping of existing capacities. In this way a vicious cycle is triggered, forcing consumers and businessmen to continue cut down their spending. As if all that was not enough, governments all over the European Union are drastically reducing the expenditure side of their budgets, while at the same time they are increasing taxes. This mix of economic policies has already sent the entire EU economy to recession, with production and incomes dropping fast in many weak economies, leaving intact only Germany. However if the same patent of economic behaviour continues, Germany will also feel the heat, because its wellbeing hinges mainly on exports. For details see WSJ on Christmas consumer spending:   http://online.wsj.com/article/SB10001424127887324712504578137093459350874.html