Crazy American Consumers
Posted: Monday, July 20, 2009
by Joel Hirschhorn
http://www.delusionaldemocracy.com
For years I preached consumer power, actually unused consumer power to impact government policies through withholding spending rather than through voting. Buycotts could wreck the economy, because 70 percents depend on consumer spending. But few listened and understood. Of course, now that the government failed to protect Americans by preventing the collapse of the housing and financial sector bubbles and gave us the current recession, consumers have sharply cut their spending, either out of necessity because of job and retirement savings losses or because of fear that they no longer have economic security. Which is why the recession is very deep and prolonged, because consumer spending is not recovering. Unemployment could be approaching 15 percent nationwide by the end of this year. It is already that and more in some places.
The shock of this recession has really changed thinking about money. One big result is that people are saving more of their money than in a very long time, actually 27 percent of people. Good for them, but bad for the economy and unemployment.
Nearly a third of Americans say they have been spending less and intend to make that their new normal pattern of lifestyle. Good for them, but bad for the economy and unemployment.
In fact, 47 percent of people say that they already have what they need, up from 34 percent in November 2006. Yet despite this there are some fascinating examples of increased consumer spending. At Amazon.com net sales have increased 21 percent in the first quarter of this year from people in the and , compared to the same period in 2008. People are avoiding shopping malls, which explain why so many stores have closed in them nationwide.
Even though car sales are down about 35 percent, certified pre-owned luxury vehicles are up, including a 15 percent increase in the first quarter of this year for BMW and 44.6 percent for Mercedes-Benz. Apparently wealth guilt is expressed by replacing new luxury car purchases with used cars in the same category. And sales of designer perfumes costing $100 or more were up 10 percent this year. In other words, indulgence is alive and well.
People want to escape economic pain. Recession pain has pushed ticket sales at movie theaters up nearly 9 percent so far this year compared to last year. And first quarter sales of Blu-ray players in the first quarter were up an amazing 72 percent over last year. Attendance at minor league baseball games has also spiked; for example, attendance at the Potomac Nationals was up 57 percent for the first ten games this year. Escape can also take place in other ways. Condom sales were up 6.4 percent in the first 12 weeks of this year, compared to last year. And gun sales increased 28 percent in the first four months this year.
And the political corruption industry is also alive and well, with spending on lobbying up in the first quarter to just under $800 million.
Debate continues on whether all the federal spending to counteract the recession has done anything for regular people and the consumer economy. Most consumers think not. And so unemployment continues to rise and spending stays low. Banks and all kinds of stores continue to fail. Homelessness and hunger also are rising and more and more people are losing their homes because they cannot pay their mortgages.
Here's and idea: If things stay dismal when the next congressional election comes around, how about voting out absolutely every incumbent member of Congress? Especially if, as it appears very likely, there will be no really major reforms in the health care system that will make quality health care both more accessible and cheaper.
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Top-level comments on this article: (1 total)Nicely done. I wonder who's buying all of that perfume and nice cars, though. Surely the super-rich have to realize their days are numbered with this administration (they, after all, will be paying for health care). Amazon's sales are up for the obvious reasons, since shopping malls will soon go the way of the Dodo. Why? Amazon is convenient shopping with no salespeople or crowds. And the malls? Other than being a teen (or pre-teen) hangout, there is no reason to pay top-dollar for something that can be purchased online. Good job.
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