Consumer spending gets a makeover
Americans are spending less money, but they are spending it on better products
The feds released a jobs report on Friday. It said that things weren’t as bad as everyone thought. The US economy actually added 103,000 new jobs in September.Skip to next paragraph
Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (dailyreckoning.com).
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But wait. That is not a lot of jobs. There are about 150 million people who make up the labor force. This number increases — by immigration and population growth — by about 1.2 million per year. So, 100,000 new jobs doesn’t do much to restore full employment.
But it’s better than nothing. And nothing was what the figures showed for the month of August. Those figured were revised upwards too — to show 57,000 jobs created in that month.
Investors were blasé. The Dow fell slightly on Friday. The yield on the 10-year US government note ended the week over 2%. And gold finished trading on Friday at $1,635.
The newspapers were more enthusiastic. They widely reported the job numbers with approval and hope. Stabilizing prices and new jobs mean that the odds of a ‘double-dip’ recession diminished, they say. But so what? Recession is not the problem. Recession refers to GDP growth. It measures “more” or “less.” An expanding economy uses more resources and produces more stuff. A shrinking economy — one in recession — produces less stuff.
But what if the real problem had less to do with how much stuff we have and more to do with what kind of stuff it is? If you have another car or another refrigerator, are you better off? What about another gall bladder operation or another war? Or maybe you’d like another gadget from China or another helping of dessert?
You would have more stuff. Would you be better off? Not necessarily.
And a lot of people are turning against it. And if they’re not, they should be. Partly because they can’t afford more stuff. Partly because they have enough already. And partly because stuff is getting in their way.
Here’s a Daily Reckoning dictum: people come to think what they must think when they must think it.
When it no longer pays to build more stuff…
And when people can no longer afford to buy more stuff…
…Stuff will become unpopular.
Already, according to TIME magazine, the average American is spending 2% less on goods and services than he did 4 years ago. That is a big change in a consumer economy.
And he’s shifting the focus of his spending too. Expensive foreign-made cars are not selling like they used to. He’s not traveling overseas as much either. Nor is he going to theme parks and sporting events.
Instead, he’s staying at home and watching TV.
And here’s something interesting…the number of farmers’ markets is way up.