Spaniards group under one roof to ride out crisis

MADRID
JESUS Garcia, 46, has locked up his belongings in a warehouse and moved back with his mother so that his teenage son and former wife could take over his low-rent apartment after her salary as a secretary was slashed.

High joblessness and falling wages are forcing Spaniards to regroup under one roof to ride out the tough times, threatening consumer spending that the country's Socialist government had hoped would pull the economy out of stagnation this year.

A self-employed house painter, Garcia's own monthly income has dropped since the crash of Spain's property boom several years ago. “We're not dying of hunger, but it's time to scale down and focus on the basics,” Garcia said.
A Mediterrean tolerance for family is helping Spain survive its stubbornly-high unemployment, which doubles the rest of the euro zone at 20 percent.
But the more people under one roof means fewer sales of everything from appliances to electricity, creating a double-edged sword and threatening to drag out Spain's economic malaise for some time to come.

After the global financial crisis, the government introduced stimulus measures such as money for buying new cars or trading in old household appliances, but that money has now run dry and the 2011 budget does not include any consumer buying incentives.

Garcia, who is learning to bake fresh bread and wants to find a parcel of land to grow vegetables, said he has warned his son that he may not be able to update the mobile phone and digital camera he carries with him everywhere.

Even people with secure jobs have seen disposable income fall due to VAT hikes in the government's austerity package to reduce the budget deficit, and a looming ECB rate hike and rising energy prices do not bode well for spending sprees. “The economy is very reliant on consumer spending, and so, in this environment it will be difficult for Spain's economy to return to full growth,” said Ben May, an economist at Capital Economics.

Spain's gross domestic product shrank 0.1 percent in 2010, and growth is expected to be sluggish at best this year.
Of Spain's 4 million jobless, about 30 percent live in a household in which every family member is out of work.
In its January bulletin, the Bank of Spain highlighted falling household demand as one of the leading causes of Spain's prolonged economic crisis and cited lower wages and fears over future earning potential as risks to consumer spending.

Household savings increased in 2009, the central bank said, but 2010 data is not yet available. Until confidence returns it will be difficult to switch saving into spending. “We have the job factor and the fear factor,” Enrique Quemada, CEO of boutique investment firm ONEtoONE said. “It's silly to think the Spanish crisis isn't going to last long.” Mariana Artero, a 34-year-old art historian who has held temporary contracts at some of Spain's best galleries and museums is now out of work and still lives with her mother. She attributes her situation to several factors. “It's a mixture of job precariousness, low wages and expensive housing prices, and perhaps the fact that we (Spaniards) don't particularly mind living with family.”