Yesterday, in what he has since dubbed "a tongue-in-cheek and ironic letter" to "stingy" US consumers, Fed mouthpiece Jon Hilsenrath asked, why even though "the sun shined in April... you didn’t spend much money."
He then framed the middle-class' lack of willingness to spend, spend, spend as follows:
We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you. We know stock prices collapsed and that was shocking too. We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite countertops. You’ve been working very hard to pay off this debt and we admire your fortitude. But these shocks seem like a long time ago to us in a newsroom. Is that still what’s holding you back?
Confusing indeed: it appears the near collapse of the financial system due to $142 trillion in debt, which has since been "fixed" with $57 trillion in more debt...
... wasn't very confidence inspiring.
Hilsenrath then added that 'You should feel lucky you’re not a Greek consumer" and concluded that "The Federal Reserve is counting on you too. Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates."
Because, you see, the Fed is giving the middle class a "free ride", not people such as Wall Street's latest billionaire.
In any event, it appears that in the 24 hours that followed, America's "stingy" middle class decided to write back to Hilsenrath. This is what it said (highlights ours).
Readers reacted strongly to Tuesday’s Grand Central commentary, a tongue-in-cheek and ironic letter to American consumers asking why their spending had slowed in recent months.
Household spending is a real puzzle at this moment. After growing slowly for much of the recovery, consumer spending appeared to be picking up early this year. It rose 3.4% in January from a year earlier, after adjusting for inflation, the fastest pace of the expansion. It seemed to be set to rise at a quicker clip in the coming months, thanks in large part to the recent decline in gasoline prices. Instead, spending slowed through April, a development that is puzzling economists. Why did spending slow early this year when households appeared, finally, to have some wind at their backs?
We asked readers to respond. Here is a summation of what they said:
A number commented on the tone of the commentary. While a small number found the tone to be clever, many found it offensive. Some said the item showed this reporter is arrogant, elitist and out of touch with the challenges faced by many Americans. That spoke to a broader mistrust that many respondents expressed toward a wide array of American institutions, including the Federal Reserve, banks, the media, corporations and the Obama Administration. Moreover many expressed a lack of conviction that the U.S. expansion would last, or that it was spreading prosperity beyond America’s elites. Others described serious continuing financial burdens related to high debts, a rising cost of living, health care costs, and a lack of wage growth.
The item was signed The Wall Street Journal’s Central Banks team. It was conceived and written only by this reporter.
“Interest rates may be zero,” said reader Thomas Eckenrode, “but I know many people with credit card debt of $10,000 paying 15%.” He added student debt is an even bigger burden for his family.
“Simply put the middle class is debt ridden and struggling,” said reader Nate York. “Many people are hunkering down instead of casually spending.”
In a twist, car dealers Tuesday reported sales in May hit a 10-year high. That might be the first concrete sign of an actual pickup in spending this year. Judging solely from the responses of Wall Street Journal readers, however, you should not expect a big spending rebound. They say a deep undercurrent of mistrust and economic strain still holds back many Americans, regardless of what the numbers say.
In conclusion all we can add is that we are surprised Hilsenrath did not end with Obama's favorite aphorism: "Do not get cynical. Hope is the better choice."