| Actually it's the sign of the economy. The reality that consumer spending on non-essentials is slowing significantly is starting to impact the bottom line at many companies. Starbucks is desperate enough to do this, hoping to lure people in by the offer of "free" WIFI. I'm not so certain it will work.
If inflation doesn't stabilize or actually drop and consumer spending, which is the driving factor in our economy(making up 70% of our GDP since we've allowed corporations to ship production and workforces abroad), see even less money available for non-essential services. When Time Warner and Comcast wake up to the fact that their attempt to raise fees through the use of caps may drive a good portion of their customer base to less expensive Internet access, it may be too late to undo the damage. (Yes, people reading broadband reports may be willing to give up something to keep broadband access, but the average consumer who isn't earning more than $45,000 a year may be hard pressed to justify keeping expensive Internet access--or even cable TV for that matter-- when it's getting harder and harder for them to keep a roof over their heads, food on the table and gasoline in the tank of their car.)
Much of the world's economy, not just our domestic one, rides on the back of American consumer debt. The pundits driving up commodity prices with the talk of Chinese expansion keeping demand for oil high, fail to discuss the global impact of a prolonged slump in consumer purchases by Americans. (Yes, there's a Chinese middle class, but it's not large enough yet to make up for a drop in sales to the US.) The reality of falling American consumer purchases began hitting segments of the Indian manufacturing market, especially clothing manufacturers, early this year with resulting layoffs of Indian workers. If American consumers continue to reduce their purchases of non-essentials through the first or second quarter of 2009, expect to see the Chinese economy begin to cool a bit, too. If that happens, once a drop in the demand for consumption begins, it may be hard to stop a free fall and OPEC may yet discover again that greed can kill the goose that lays the golden eggs. |
