Consumer Driven Economy Or…?

The US has been a primarily a consumer driven economy for more than a hundred years now and I kinda think Enough is Enough. That is what this post is all about.

I don’t think of myself as an economist, but I do think I have a pretty good helicopter view of most things that matter. It kinda bothers me that so much of U.S. economy depends on its citizens buying more and more.

I have a few reasons to believe that.

  • Most of us in the U.S. have much more stuff than we really need.
  • We have an average credit card debt pushing $9,000 from buying stuff we don’t need.
  • Our roads and infrastructure are the laughingstock of the industrial world because we don’t sit aside enough money to keep them up.
  • Our annual national deficit is growing exponentially, grossly so in the last three years.

Even with our 3,000 to 6,000+ square foot homes, we still don’t have enough room to keep all our stuff. Storage lockers such as the ones above dot our landscape. I might even dare to guess that they outnumber cell towers. 🧐 And many of the things we store in these facilities are never removed until the heirs of the estate have someone come in and clean them out.

I recently came across a TLC Channel called Hoarders – Buried Alive. I wonder if hoarding is just an American thing? It showed as the photo here indicated that the person had accumulated so much stuff that it consumed their abode. The occupant just couldn’t stop buying things or allow herself to throw anything away. More sadly than that, she was about to lose her kids because of the clutter, and she still didn’t know how she could clean it up!

Why do we have to consume so much and then turn around and refuse to allow an increase in taxes to rebuild our crumbling infrastructure? If we only spent a little less on our stuff we could easily assure the healthcare is a right of all and not just a privilege of a few.

One bright light on the horizon is that Millennials and especially Generation Z are shunning the idea that more stuff means more happiness. As the chart below indicates they see their tomorrows as being destroyed by consumer spending today.

About 70% of U.S. GDP is made up of consumer spending. That compares to Chinese GDP of 35%. Sweden, which has one of the happiest nations on earth spend almost 50% of their GDP on infrastructure and the well-being of their citizens. When consumer spending is curtailed it allows for more infrastructure improvements, R&D and reinvestment. When consumption is preferred to future investment, debt almost always follows. The U.S. is definitely a debtor nation.

In summary, I guess we Baby Boomers will have to depend on Generation Z to eliminate our fixation with stuff as we just can’t seem to kick that addiction without their help.