For some reason, maybe it’s the stock market, maybe it’s just wishful thinking-of-anything-but-wars-&-health-reform, consumerism is all over the news of late. Summer tourists didn’t tour as much or buy enough, clunkers were eagerly turned in for cars, caution abounds in the land. People are even beginning to save for the rainy days that have not yet cloudburst upon them.
A closer look at all this was taken through a couple of recent studies reported on by the San Francisco Chronicle’s Tom Abate this morning. Abate focuses on California, but the trends are all over.
California will trail the nation in emerging from the Great Recession, as consumers save more and spend less in a behavior shift that will slow growth and job creation in the short term but eventually lead to a stronger economy.
That message emerged from two separate reports released Tuesday by the UCLA Anderson Forecast and Beacon Economics, a consulting practice with offices in San Rafael.
Both forecasts characterized California as the epicenter of back-to-back consumption binges fueled by the dot-com boom and the housing bubble, and argued that now the state faces big adjustments as it recovers from ills that have long plagued the U.S. economy.
“Consumers have been on a spending binge ever since 1995,” said Jon Haveman with Beacon Economics, as soaring 401(k)s and, later, inflated home prices made Americans feel so wealthy they stopped saving money.
California, of course, rather outdid itself in the business of spending too much, buying too much and borrowing to do more of the same, but none of this was peculiar to the left coast.
It did not go unremarked, however, by one of the current candidates for Mayor of New York, Rev. Billy. You don’t know Rev. Billy of the Church of Stop Shopping? You’ve been missing something. The Rev, probably going on the ballot as Bill Talen, does not get the coverage that other candidates do, but he is dead serious about his mission and pretty raucous about delivering the message. He is seriously running for Mayor. He doesn’t like consumerism, or the corporate takeover of America, or war. At times his church becomes the Church of Stop the Bombing. In any event, if we’d been listening to Rev. Billy all these years we might have missed getting in quite so deep a mess — but we’d also have missed a lot of Starbucks lattes.
Now comes word that senior shopping at Walgreen, Rite-Aid and Family Dollar stores is going to be made more comfortable, just in time for Boomers to start turning 65 in 2011. According to a recent Wall Street Journal story by Ellen Byron, in one exercise designed to help participants in a Kimberly-Clark program understand the difficulties confronting senior shoppers, Kimberly-Clark executive Don Quigley tried going through the aisles with dark-tinted glasses, un-popped popcorn in his shoes and his thumbs taped to his palms. This rather hurts my senior-shopper feelings if it is how Rite-Aid sees me, but I will try to appreciate the effort.
It appears that we current savers/cautious spenders are not expected to change back to rampant consumerism overnight, which is good news to the senior seniors of us, brought up so rigorously in the save-first-spend-later mode that we feel better within it anyway.
Ed Leamer, director of the UCLA Anderson Forecast, said consumers usually roar back from recessions with spending that lifts production and fuels hiring, but he thinks that is unlikely during this recovery because Americans have been living beyond their means for too long – borrowing too much and importing more than the country sells abroad.”We need to turn our shopping malls into factories,” Leamer said “Our economy over the next decade is going to have to build more of the stuff we buy.”
Haveman said the painful adjustments now under way should eventually benefit California and the Bay Area, which lead in technology, biotechnology, clean energy and other cutting-edge industries.
“The light at the end of the tunnel is visible, but it’s still a long way off,” he said.
That business about turning shopping malls into factories and living within means — that’s going to please Rev. Billy.