A decade of excess consumption pushed consumer spending in the United States up to 72 percent of gross domestic product in 2007, a record for any large economy in the modern history of the world. With such a huge portion of the economy now shrinking, a deep and protracted recession can hardly be ruled out. Consumption growth, which averaged close to 4 percent annually over the past 14 years, could slow into the 1 percent to 2 percent range for the next three to five years.
The United States needs a very different set of policies to cope with its post-bubble economy. It would be a serious mistake to enact tax cuts aimed at increasing already excessive consumption. Americans need to save. They don’t need another flat-screen TV made in China.
The Times relayed this message in somberish tones, but hasn't reducing consumption been universally acknowledged as a key step to reducing strains on the environment? And don't an awful lot of people dutifully nod along with statements like "American society is too materialistic"? This ought to be hailed as a positive trend, despite the economic adjustments it entails.
I've long held the notion that if everyone lived within their means, the economy would collapse, and events of this fall may have proved me right, for whatever that's worth. It remains to be seen whether we will emerge from this mess with something resembling a sustainable economy, and whether people might embrace that with anything like the fervor with which they charged and spent for the last decade.
1 comment:
The technological march continues - we're not watching the tube anymore. The Open-Source movement is a good example of this agility, which is the ability to produce goods extremely efficiently, deliver quality, and with enthusiasm. However, I do like watching the old tube-style T.V.'s.
- Ed
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