Why We Can’t Spend Our Way Back To Normal
After a decade of reckless overconsumption, why is buying more stuff still expected to save the economy?
By JULIET B. SCHOR
Every month, one of the most anxiously anticipated pieces of economic information is the Commerce Department’s spending data. Are people in the malls? How deep are discounts? Spending is cheered; frugality causes concern. In the drama that is the U.S. economy, consumers have been cast as the hero, expected to provide the growth that avoids a double-dip recession and rebalances the labor market.
It’s an increasingly quixotic hope. Consumers, burned by predatory financial institutions and labor market insecurity, are in no position to play the Little Engine That Could. But even if they were, is what ails the country really a shortage of cars, cell phones and Cuisinarts?
In the decade leading up to the collapse, the country went on a consumer binge. This won’t be news to anyone. But what might be surprising is the sheer volume of commodities that were acquired, many of them imported. (That’s one reason that the spend our way out of unemployment approach no longer works.)
According to my estimates, the number of new items of clothing bought by the average American rose from 41 to 67 items per year. Furniture purchases rose 150%. Consumer electronics — from coffee makers to laptops to cell phones — rose between 100 and 1000% depending on the item, and it wasn’t just the cool gadgets. We bought 180% more vacuum cleaners. By both weight and volume, material acquisition hit all-time highs.