Saturday, April 19, 2008

My thoughts - only better and with statistics that will make your heart skip a beat.

This story just came out in Newsweek regarding the cycle of American consumerism that appears to be on the decline along with our booming economy. It is a good follow up to my recent consumerism posts (which you can read here and here if you haven't already).

The Great Shopping Spree, R.I.P., by Robert J. Samuelson

For two decades, it's been driven by rising debt levels. At the end of 2007, household borrowing was a dizzying $14 trillion.

Apr 28, 2008 Issue of Newsweek

Transfixed by turmoil in the financial markets, we may be missing the year's biggest economic story: the end of the Great American Shopping Spree. For the past quarter century, Americans have gone on an unprecedented consumption binge--for cars, TVs, longer vacations and just about anything. The consequences have been profound for both the United States and the rest of the world, and the passage to something different and unknown may not be an improvement.

It was the ever-expanding stream of consumer spending that pulled the U.S. economy forward and, to a lesser extent, did the same for the global economy (the reason: imports satisfied much of Americans' frenzied buying). How big was the consumption shove? Consider. In 1980, Americans spent 63 percent of national income (gross domestic product) on consumer goods and services. For the past five years, consumer spending equaled 70 percent of GDP. At today's income levels, the difference amounts to an extra $1 trillion annually of higher spending.

Read the whole story here.

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