The New York Times published an article today (“Full of Doubts, U.S. Shoppers Cut Spending“) where they predict that consumer spending will fall 3% in the third quarter compared to the preceeding three months, the first quarterly decline in consumer spending since 1990. This reflects the shocks to consumer confidence brough on by the bursting of the housing market bubble, stock market declines, and financial market turmoil. Simply put, our houses and stockholdings are worth less, and these feelings of reduced wealth translate into reduced spending.
The last time this happened, the first President Bush made a famous public appearance where he purchased socks and encouraged Americans to go out and spend to restore the economy to strenght. Since that time, we’ve embraced spending as a patriotic duty with predicatbale consequences. Our national savings rate has fallen from ~10% in the early ’80s to ~1% today. We’ve also expanded aggregate consumer debt, pushing household debt from ~60% of disposable income in the ’80s to nearly 130% today.
Against this backdrop, the American view of thrift had begun to look quaint. Indeed, the Boy Scouts may have been the only organization to consistently promote thrift as a virtue. But times appear to be changing–with reduced household wealth, and financial and employement security we’ve started to save again out of necessity.
Will we see a new generation embrace thrift? At GoalSpring, we hope so. Only by promoting trhift, can we begin to make reduce our consumer and governmental debt and put ourselves on a long-term sustainable economic path. We hope you join us by reducing debt and encouraging others to do the same.
Do you think we’re on to something or perhaps flat out wrong? Either way, leave a comment, forward to a friend, or email us. Make a difference.
Tags: Add new tag, DebtGoal, GoalSpring
