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U.S. President Barack Obama, plans to spend $300 billion on a jobs package. Apparently he’ll announce tonight that this will be part of his stimulus plan, according to most media outlets in the U.S. Bounce ahead 2 years and it seems that he followed the right strategy. Were is our economy headed? It seems to be going the right direction. We avoided major bank failures and several major car company failures.

Millions of people are out of work, but millions more would have been out of work as well. With all of these people the economy would have suffered catastrophic failure and slow downs. That we are recovering and headed in the right direction says a lot about how it has improved and how we avoided a major melt down. So were is our economy headed?

Were is Our Economy Headed

Meantime,  Europe struggles to contain its government debt crisis, and their greatest fear is that one of the Continent’s major banks may fail.

With this kind of news and concerns being expressed every day by various people it is no wonder that consumers are holding back and conserving cash.  As soon as consumers begin saving money and not spending, it has a ripple effect that is hard to stop. Companies receive less revenue and produce less goods. They lay people off to reduce their expenses and these people who are looking for a job also spends less. Pretty soon you are within what is called the death spiral and that is what everyone is worried about.

Mountains of Cash

At the same time, major corporations are sitting on mountains of cash and are conserving this cash to help withstand another recession if it comes. They learned this lesson in 2008 and they are going to make sure that they are armed with cash to withstand a recession. Of course this does not help the average consumer unless you happened to be an investor. Some companies are even increasing their dividends that they pay each quarter.

So were is our economy headed now. Well the other shoe has to drop and that is what is going to happen in Europe. Some people feel that there is danger of a major bank failure. If that happens there will be a major stress point placed on all economies around the world. We are so closely linked financially that there will be an impact for sure.

Thank goodness interest rates continue to remain low for the foreseeable future.

As the average consumer, the only thing we can do is to spend wisely and save our money to make sure we have something for a rainy day! That is what we think about were is our economy headed.

For more thoughts about US politics, click here.

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