Large Living Gets Smaller

After years of living large, US households are finally learning what financial experts thought they never would: to live within their means.
“For many years, people on Wall Street have refused to believe that American consumers could ever change their spending habits,” said David Rosenberg, an economist at Merrill Lynch. “But it is happening. Frugality is in, extravagance is out.”
Consumer spending accounts for 70 percent of the US economy. According to Rosenberg, 30 percent of that is discretionary spending-that is, buying stuff you can live without.
As a result of these spending habits, some American house buyers borrowed irrationally. Many low-income householders have been unable to meet their loan repayments. Now banks have to write off these so-called “sub-prime loans”. Sub-prime crisis is the reason of the economic crisis today.
That has caused a credit crunch-banks have not enough cash in reserve. As a result, the problem has spread and turned into a worldwide financial crisis.
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Nowadays, America was trapped in the serious economic crisis. Most of the citizens are afraid to fail their own consumption. So they dare not to live large and begin their small life.