Intel Corp (INTC)

[Sarmad]

w,

Let's start fresh. Consumer spending in the US economy is expected to decline by $500B this year.

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(based on $10T drop in household wealth. And 5% drop in spending, based on models of past behaviour).

http://www.forbes.com/2009/02/05/spending-housing-equity-opinions-columnists_0206_bruce_bartlett.html
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Basically, this means US corporations will have $500B less domestic revenue. I am not sure whether this wipes out all profits, or not. I would appreciate a pointer to that aspect.

The issue is whether government spending can offset this revenue loss. Maybe it can, this year and next.

The next point is whether consumer spending will revive after that. Without that revival, the unemployed will not be rehired by the private sector, because there won't be funds to pay them.

For me, a relevant discussion has to focus on that issue. I think as long as house prices continue to decline, consumer confidence cannot be restored, and recovery cannot happen.

The so-called Stimulus is meant to keep employment up, while some solution is found for housing. (which is the root of the bank problem).