Has The Great American Shopping Spree Finally Ended?

Transfixed by turmoil in the financial markets, we may be missing the year's biggest economic story: the end of the Great American Shopping Spree. For the past quarter century, Americans have gone on an unprecedented consumption binge--for cars, TVs, longer vacations and just about anything. The consequences have been profound for both the United States and the rest of the world, and the passage to something different and unknown may not be an improvement.

It was the ever-expanding stream of consumer spending that pulled the U.S. economy forward and, to a lesser extent, did the same for the global economy (the reason: imports satisfied much of Americans' frenzied buying). How big was the consumption shove? Consider. In 1980, Americans spent 63 percent of national income (gross domestic product) on consumer goods and services. For the past five years, consumer spending equaled 70 percent of GDP. At today's income levels, the difference amounts to an extra $1 trillion annually of higher spending.

Read the whole story here.

Comments

[javaman]

my wife and I have agreed not to buy anything new for the rest of the year. More than likely, this will become a permanent thing.

[heal57]

For most people it has. Many of us have come to realize we have to try to live within our means. We have gone from 2 cars to one car, and it's not a problem for us. We don't drive a lot of miles and we have a Lexus SUV hybrid which we are keeping. We're spending on health only. I'm fine with it; I detest credit card debt. Let's make our country stronger but not buying what we can't afford. With the price of fuel rising, there will be things made in American again. It's a matter of time.

[Gary47]

Let's hope so. Then people will start talking to their neighbors instead of going to the formaldehyde-laden malls in their gas guzzling SUVs to buy over-priced foreign-made crap that they donate to Goodwill after it sits around the house gathering dust for a few years. One potential good outcome of the economic crises.

[loki]

IMHO , I would say it has, but not for the rich , yet. I have noticed over the last couple months and in several midwest cities and towns that many of the stores that service the middle class and lower income residences are closing up shop. From Value city and Big Lots, to Family dollar and the other dollar type stores, they are being found with the doors locked, lights off and completely empty. Not moving, but closing down. I am not sure if the shopping spree is over by choice. It could be more because there are less places to shop at with prices most people can afford. Even Wal-marts have closed up shop in some areas, and you figure if the greedy bastards are Wal Mart are bailing out, things have got to be bad.

[Weathermaker]

Yup, the great American spending spree has ended. However, don't feel too bad for Walmart. The great Chinese spending spree has just begun. After all, that's where the manufacturing jobs are.

[ImpeachmentNOW]

"Has The Great American Shopping Spree Finally Ended?"

Don't bet on it. The material greed of most American's is boundless. Obscene and boundless.

[GreedyOldPsychopaths]

Yes, but for the vast majority, incomes are finite.

[sixthskinjob]

The same may be said of calories, protein and carbs.

[Trittydi]

We turned our television off about 15 years ago. This helped us guarantee that our kids did NOT belong to Corporate America. This helped pre-empt any driving need to acquire "stuff" and a need to "keep up with the Jones." We got by the whole "you deserve" phase of consumerism that was so passionately driven by Corporate America.

"You deserve"? Is America Brain Dead? But they WERE being SOLD by powerful corporate interests with seeming unlimited amounts of money to feed into the furnace to make sure it happened.
*

[vandegrasse]

I admire you. I'd like to do what you're doing, but they've already been brainwashed. So sad. I keep trying though but the horse is way out of the barn.

[Troubledwawa]

I think Mr. Samuelson hit the nail rather squarely on the head with his sobering analysis.

With the average debt level to discretionary spending being at 139% for the American Consumer, it's no wonder the spending is starting to curtail itself.

And this is a good time to not be in debt. Or if you are in debt, have the cash available to pay it off. Without question, the "simple life" is starting to look good right about now.

Mr. Samuelson wrote: "Another possibility: a surge of investment in new technologies." as a possible long term solution to this dilemma we all face. He's right. I can't think of a better path for all of us than to get investments into green technologies going - and keep the jobs in the US.

[CaptainHowdy]

Actually you are very, VERY wrong.

It is a GOOD time to buy on credit (fixed rate of course) due to a devaluating dollar. You are borrowing money that can be used at it's current purchasing power and paying it back with lesser value currency later on down the line.

Why do you think that banks are raising credit card rates to obscene levels, being cautious about lending and not lowering their fixed rates in line with the Feds rate? They know what's up.

[JohnKemp]

Just came from Wal-Mart & Costco.

Don't believe they heard the "news."

[Troubledwawa]

They will.

The "news" is coming to a theater near them, sooner rather than later, I suspect.

[biwee]

Someone help me out with this spending binge. I do not "get it". As a retiree living on a fixed income (and not much at that), I am unhappy if I can not save at least 20% of my after withholding income each month. And, when I start early Social Security in about 18 months, I will save all of that. I avoid debt like the plague, drive a 6 year old vehicle with 60,000 miles on it, have NO big screen TV, receive my TV signal over the air, and I just do not "get it". No cellphone either. But, on the upside $4/gal
gas (soon coming to this area) will not crimp my safe and simple lifestyle.

[Gary47]

My hero! Yeah! Someone else in America who gets it!!!

[outnow]

Bush said that you should just go shopping and leave the spreading of democracy to him. Cheney said that he to go on the "dark side" so just relax and Iraq and Afghanistan would be handled. Meanwhile you could use your home as an ATM for shopping and even to throw a little money into the Wall Street Casino. The economy was based on bank charges, derivatives, credit default swaps, liars loans, and consumer spending. The keep lowering the interest rates at the FED and relaxing all manner of economic regulation. Now we have socialism for the very wealthy. Just because your pension is bankrupt and your job is gone, your home is being foreclosed on, and you and your children do not have health insurance doesn't mean that the invisible hand of the free market isn't doing its job - it is. Don't save money because they'll be plenty more as it is printed up. The U.S. dollar will be worth less than Confederate dollars.

[WorkingClass]

"The economy was based on bank charges, derivatives, credit default swaps, liars loans, and consumer spending".

You are correct. I particularly like your use of the word *was*.

"The U.S. dollar will be worth less than Confederate dollars".

I thought you were going to say the U.S. dollar will be worth less than the constitution.

[totalliberal]

You people are traitors and cowards. Don't you realize that by not shopping the terrishts will win.

George W. Bush Preshident.

[JoeBlough]

Just what will the terrorists win? Bush uses the word but doen't say what it means.

[MetalCanuck]

Buy gold and silver. Get commodities, they will be the only industries making money...especially if they are outside of the US and Canada.

[totalliberal]

Ya, everyone knows that American and Canadian gold is no good. WTF are you talking about?

[WIpatriot]

Quantum leap you made there.

[drkazmd65]

About the only things I am planning on buying in the near future are canned goods and non-perishable dry goods, a good water purifier and filters, some home repairs and perhaps some ammo and a reliable gun.

Its going to be a couple (or more than a couple) of interesting years folks 'till we get this all sorted out.

[Wolfgang]

If you live in NYC or Washington DC, you might have a little problem with that last item. Also, President Obama won't like it if you cling to your gun.

[CaptainHowdy]

Errr... I think that you meant President McCain. That is if their isn't another false flag and Bush/Cheney stay.

The Dems have damaged each other too much because of Hillary's stubbornnesses about staying in race that she can't win.

[ErnestineBass]

Flagged for blatant stupidity and fearmongering, Wolfgang.

[drkazmd65]

Hey - it's my Constitutional Right to 'cling' to my gun should I have one - at least if it is part of a well regulated militia. Might have to go an form one of them thar' militia thingies. Soon to be President Obama (I just don't see Hillary Clinton or McCain winning) can just cope with me and my gun.

:D

And luckily I don't live in either NYC or DC.

[NelsonR]

The most insane comical aspect to this binge shopping was observing the various retailers selling items to consumers with no interest and no payments for months and years. It was astounding, who would want to start paying for something when you have used it, abused it and now it's not functional. Our economy deserves the problems it now has and like the Financial institutions who loaned on homes without even verifying employment, retailers you are next. You deserve going under.

[Aaror]

Even better were the "cash back," deals. You buy a $20,000 car for $25,000 and get $3000 cash back, then you spend the three grand and have a debt greater than the value of the asset, on an asset that depreciates faster than the debt is paid off. But the cash back is a "reward," for putting yourself in debt, and works well to get folks to buy a new car before they need to.
Helps make sure the lemmings consume faster.

[NelsonR]

Wow, never heard of that program but it equates to bankers loaning 125% of value for primary residences.

Now, I'm laughing at our imbecile and juvenile system that the average citizen accepts as a normal course of doing business here in America. No wonder Bush is our chief decider.