Wikinvest Wire

Consumers, they are a-changin'

Monday, January 18, 2010

Rick Newman at US News reports on seventeen ways that American consumers are changing their spendthrift ways, all of which will make an economic recovery much more difficult. The first seven are excerpted below and it seems that our household is way ahead of the curve here, adopting all of these measures five or ten years ago.

Less credit, more cash. Consumer borrowing has fallen by record amounts, as Americans pay down debt and adjust to banks lowering their credit card limits.
The end of the monthly payer. Many consumers used to be comfortable piling up debt as long as their income could cover the monthly payments. No more.
Greater suspicion. Banks wrecked the economy, then cut lending and raised fees. The government prevented a depression, but not before giving billions to Wall Street titans.
More resourcefulness. If you can't count on anybody else, then you're likely to rely more on yourself.
Less brand loyalty. Millions of consumers traded down to store brands over the past couple of years—and many plan to stick with them.
Smaller is bigger. It goes without saying that many things are getting smaller rather than bigger, including household budgets and people's ambitions.
A rental rebound. The "ownership society" is over. After peaking a few years ago, home ownership rates, not surprisingly, have started a long journey downward as foreclosures shake out people who couldn't afford their homes...
The good news is that, at some point in our future, we'll stop hearing business news personalities reporting the quarterly GDP numbers and blithely noting that consumer spending accounts for 70 percent of the economy.

Bookmark and Share


Anonymous said...


Your point re:

"A rental rebound. The "ownership society" is over. After peaking a few years ago, home ownership rates, not surprisingly, have started a long journey downward as foreclosures shake out people who couldn't afford their homes..."

I lost my home. Not because it wasn't affordable, but because my career of some 20 years came to a screeching halt in 2007. Before that, I could afford my mortgage, gas, groceries, child support, etc. and still had 20 percent of my NET income for savings and early retirement of my auto loan.
I had no other outstanding debt. In the last 3 years I have seen a total of 7.5 months of available work, total. I am protesting the broad-brushstroke indictment of millions of people who, like myself had the foundation of our lives taken away, probably for good. Please exercise a little more sensitivity and stop repeating a "stock" talking point as an absolute unilateral truth.

Okay, flame/rant over. Thank you for listening.

Tim said...

There are two broad groups of people who are losing their homes these days:
1. People who had no business buying and could only do so as a result of low interest rates and lax lending standards.
2. People whose incomes have been severely impacted by the recession.
I think he was referring to group 1, whereas, you're in group 2.

Anonymous said...

For a "rental rebound", rental vacancies sure seem at an all time high.

Anonymous said...

The lack of citizen enthusiasm for more debt could push the central bank into a frenzy of printing. This could make things worse, much worse.

Dan said...

Yeah, made those changes quite a long, long time ago.

I rarely use credit. I don't get the opportunity to lever up, but I never miss a wink of sleep either. I've always been suspicious of banks, counted on myself and lived within my means. I've always bought items at the grocery store that were the lowest price per unit of measure; that's not always the store brand though. I've never been a brand loyalty guy though. I don't get the rental rebound. There are still two, brand-new condominium complexes in my neighborhood that were completed over a year ago that have no occupants. Although complete, they magically have not hit the market yet. Rental prices in my neighborhood are still too high. While they're not as high as a mortgage payment would be, they're too high to allow the people paying rent to save for a down-payment on a home purchase.

  © Blogger template Newspaper by 2008

Back to TOP