Flawed economic models and consumer’s attitude changes towards money

Can analysts have been so blind to what was coming, or they simply chose to ignore the facts?

Mish’s Global Economic Trend Analysis: US Homeowners Confound Predictions

This is not what the models predicted. Part of the explanation for this is related to the continuing shift in social mood toward debt repudiation and the relative attractiveness of scaled down living. And some of it is simply a rational response to deflation and negative home equity. Why fight to save something that is going down in value?

In any case, we are already seein a Change in attitude towards credit and money slowly becoming mainstream

Today, Ms. Merhaut, 44, manages her money the way her father did. Despite a household income reaching six figures, she uses cash for every purchase. “What we have is what we have,” Ms. Merhaut said. “We have to rely on the money that we’re bringing in.”The shift under way feels to some analysts like a cultural inflection point, one with huge implications for an economy driven overwhelmingly by consumer spending.

February 6, 2008 · Filed Under Business, Interesting tidbits, World news

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