Ilan Moscovitz
August 5, 2011
The heightened market volatility we've experienced over the past few days serves as a reminder to all of us: Massive financial crises like the one we experienced in 2007 take time to heal. The rule of thumb is about a decade. With that in mind, what's going on in this crazy market, and what should investors do to protect and grow their portfolios?
The problem is actually pretty simple. Consumer spending has historically made up about 70% of the U.S. economy. But with consumers suffering from high personal debt and unemployment, they're not spending. The graph below shows just how far we've fallen below the trend line:
Source: St. Louis Federal Reserve Bank.
