According to an article in today’s Wall St. Journal, Thanksgiving weekend sales actually declined from last year. This was the first time this has happened in seven years. The figures account for the early Thanksgiving day sales. The article comments on the effect of “consumers that continue to be strained by a gloomy economic environment.”
The result is that retailers are going to be forced to offer even deeper discounts to attract customers. Once one major retailer does this, then others will be forced to follow. This will cut into their profits.
Some Keynesian economists like Robert Kuttner say that figures like these prove that the government must do something to boost workers’ income. They propose increased government spending on such things as infrastructure. However, this would only change how the underlying contradiction shows itself. As charts like this one show, the total amount of money (“money supply”) has skyrocketed in the US. There are two factors that determine inflation: One is money supply. The other is what they call “velocity”. This means how quickly money is circulated. In reality, it is little but a measure of demand; when demand increases so does the “velocity”. In recent years, demand has been low so velocity has been low also. If the government started actually spending money on infrastructure and other such things, then demand would pick up, and guess what would pick up with it…
You got it: Inflation.
In other words, the economic crisis would simply express itself in a different way.