American and Canadian consumers have long been living beyond their means. Today, Canada announced their latest unemployment figures-6.3% or 70,600 people out of work in November, the largest drop in a quarter century (26 years). ( Analysts surveyed by Reuters had expected only 25,000 job losses in November) That's another 70,600 who will have difficulty paying off their credit card debts, forcing banks to come back to the government for a second round of bailouts at some point in the future. Likewise the USA lost 533,000 jobs in November, nearly twice what was expected; Unemployment climbed to 6.7%
The credit card bubble has been building for some time as we see in this 2007 report: Canadians Crushed by Credit Card Debt
"The U.S. isn't the only nation buried by massive consumer debt.
Several recent studies have found that many Canadians are struggling with tens of thousands of dollars in credit card debt, and 90 percent of those surveyed felt that they were deeper in debt than they were five years ago.
One survey of 4,000 Canadians found that 28 percent of the respondents had no idea what the interest rate on their credit card was; 25 percent of the respondents had consumer debt between $10,000 and $40,000, not counting debt from mortgages; 53 percent of Canadians surveyed said they had no budget for their income."
Since consumer spending accounts for 2/3 of the US GDP, there's not much chance that consumers will be leading the USA and Canada out of this recession /depression-they are just too maxed out.
That's bad news for commercial shopping mall properties that are teetering on the brink of mortgage default, according to a report this week in Newsweek.
'Moribund malls have not gone unnoticed amongst industry analysts and Web sites like Deadmalls.com that feature photos of hundreds of now-abandoned sites. But what were once just worrying signs appear to have finally flat-lined. Last year was the first in half a century that a new indoor mall didn’t open somewhere in the country—a precipitous decline since the mid-1990s when they rose at a rate of 140 a year…"
The mood of consumers has quickly shifted from denial (in May 2008) to sheer shock and panic in November / December 2008. Entrepreneurs, however need to shift their mindset into tempered realism and tempered optimism, knowing that there will be many more opportunities in this economic crisis.
Watch out though, this will also be an unprecidented time for scam artists offering people false hope and get rich quick schemes too.