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Today's Top News
The Fall of the American Consumer
How much lower can consumer spending go? The malls are like mausoleums, retail clerks are getting laid off and AOL recently featured on its welcome page the story of a man so cheap that he recycles his dental floss--hanging it from a nail in his garage until it dries out.
It could go a lot lower of course. This guy could start saving the little morsels he flosses out and boil them up to augment the children's breakfast gruel. Already, as the recession or whatever it is closes in, people have stopped buying homes and cars and cut way back on restaurant meals. They don't have the money; they don't have the credit; and increasingly they're finding that no one wants their money anyway. NPR reported on February 28 that more and more Manhattan stores are accepting Euros and at least one has gone Euros-only.
The Sharper Image has declared bankruptcy and is closing ninety-six US stores. (To think I missed my chance to buy those headphones that treat you to forest sounds while massaging your temples!) Victoria's Secret is so desperate that it's adding fabric to its undergarments. Starbucks had no sooner taken time off to teach its baristas how to make coffee than it started laying them off.
While Americans search for interview outfits in consignment stores and switch from Whole Foods to Wal-Mart for sustenance, the world watches tremulously. The Australian Courier-Mail, for example, warns of an economic "pandemic" if Americans cut back any further, since we are responsible for $9 trillion a year in spending, compared to a puny $1 trillion for the one billion-strong Chinese. Yes, we have been the world's designated shoppers, and, if we fall down on the job, we take the global economy with us.
"Shop till you drop," was our motto, by which we didn't mean to say we were more compassion-worthy than a woman fainting at her work station in some Honduran sweatshop. It was just our proper role in the scheme of things. Some people make stuff; other people have to buy it. And when we gave up making stuff, starting in the 1980s, we were left with the unique role of buying. Remember Bush telling us, shortly after 9/11, to get out there and shop? It may have seemed ludicrous at the time, but what he meant was get back to work.
We took pride in our role in the global economy. No doubt it takes some skill to make things, but what about all the craft that goes into buying them--finding a convenient parking space at the mall, navigating our way through department stores laid out for maximum consumer confusion, determining which of our credit cards still has a smidgeon of credit in it? Not everyone could do this, especially not people whose only experience was stitching, assembling, wiring and packaging the stuff that we bought.
But if we thought we were special, they thought we were marks. They could make anything, and we would dutifully buy it. I once found, in a party store, a baseball cap with a plastic turd affixed to its top and the words "shit head" on the visor. The label said "made in the Philippines" and the makers must have been convulsed as they made it. If those dumb Yanks will buy this...
There's talk already of emergency measures, like making Christmas a weekly holiday, although this would require a level of deforestation that could leave Cheney with no quail to hunt.
More likely, there'll be a move to outsource shopping, just as we've already outsourced manufacturing, customer service, X-ray reading and R&D. But to whom? The Indians are clever enough, but right now they only account for $600 million in consumer spending a year. And could they really be trusted to put a flat screen TV in every child's room, distinguish Guess jeans from a knock-off and replace their kitchen counters on an annual basis?
And what happens to us, the world's erstwhile shoppers? The President recently observed, in one of his more sentient moments, that unemployment is "painful." But if a pink slip hurts, what about a letter from Citicard announcing that you've been laid off as a shopper? Will we fill our vacant hours twisting recycled dental floss onto spools or will we decide that, if we can't shop, we're going to have to shoplift?
Because we've shopped till we dropped alright, face down on the floor.
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151 Comments so far
Show AllJust telling my husband about this. We don't make anything in the US anymore. When we get our "economy-fixer-upper" checks, they'll all be going from our bank accounts to China via Walmart, which will do nothing to help our economy. If you get one of those checks, may I suggest you go to a fair trade store and buy something? Even if you don't need it? At least it won't be going to China...and a sweat shop, er, offshore manufacturing corporation.
" We don't make anything in the US anymore."
Of course we do. In fact, with the weak dollar, our exports are up substantially, lowering the trade gap. Why do so many people parrot this?
What do you mean, we do not make anything in America anymore? How about war, munitions? Bombs,missles,tanks,guns,bullets ect.
That too. The point was that it's not very smart to repeat cliches that just aren't true.
The US builds more prisons. Those are made in the USA.
Jakenewton, have you actually tried to shop US only for everything you buy? 'Cause this is how I shop -- daily. Canadian label first choice (because I live here) and US second -- for the carbon footprint factor. It's hard enough to find Canadian, harder still to find US. Or maybe your stuff just isn't coming to Canada (despite exports up, trade gap down) . . . and I live in a large urban centre.
Because Americans confused their responsibilities as citizens with consumerism and didn't analyze the propogranda to spend themselves out of security, they are unprepared to handle the reality of being responsible both in their citizenhood and in their consumerism. I still remember the man standing in line saying he needed an iPhone. You need food, water, air, shelter, not a piece of equipment that duplicated other things you have. Better to stand in line to protest what the government is doing to you.
The US makes even more weapons than prisons and the weapons get exported to the highest bidder, irrespective of whether or not those weapons will be used against the US military or US citizens.
jake is right. The U.S. has a booming export industry in death and debt. Ride the wave.
What were they thinking? --That we could keep doing this indefinitely? Globalism, deregulation, free trade -- inevitable? There was a radical discontinuity: The industrialized countries had relatively stable populations, while the "developing world" had burgeoning populations. Of course they would work for less. Of course business would go for the lowest cost production. The bugaboo was "isolationism". So here we are.
And don't remind me that we consume so much more than they. That is of course because they don't have (haven't had) the money to consume like we do. No, we are going on SEVEN BILLION people and counting, on a planet that has a shrinking land area. Think about it.
"...this would require a level of deforestation that could leave Cheney with no quail to hunt."
I thought Cheney bags lawyers.;)
Just to be nit-picky: Quail thrive in tall brush, not in forests. Ms. E. is an experienced journalist (who I admire) and should have known better than to toss that line in without knowing anything about it.
Hell, last I heard we were doing a booming bid'ness in exports of shitty movies, poorly programmed computer software, "grey graph-paper brained" (as Jello Biafra once put it) music and overheated jingoistic rhetoric.
Oh, and small arms, like the ones used in last Thursday's massace in Israel.
So, you see, it's not all black and white! It's more technicolor, like the technicolor yawn I want to make every time I think of what Bush & Co. has done to this country.
Just this morning there was a segment on NPR about how Caterpillar Corp. is doing extremely well thanks to exports of American made heavy equipment. Guess where they're going... mostly to the mining and construction industries in third world countries. Yes, we're doing a great job of exporting the tools of deforestation and environmental degradation. Three cheers for global capitalism!
US Bureau of Labor Statistics definition of manufacturing:
http://www.bls.gov/oes/current/oessrci.htm#31-33
scroll down to
NAICS 722000 - Food Services and Drinking Places
We do manufacture hamburgers; I don't know that we export them though.
An elderly lady wrote an insightful letter to our local paper pointing out that the recent interest rate cuts (unjustified as they were due to real inflation) will actually do much toward discouraging retail sales. She pointed out that all of her discretionary income comes from interest on her bank CDs (the case with many many seniors), and now that the Fed is sharply cutting her income that she will necessarily be cutting back on her shopping. She plans to put her "stimulus" payment tightly in the bank.
I wonder what the disaster capitalists are thinking? It's not a tsunami, hurricane, or civil war, but a paucity of shopping. I get solicited by Capital One through the mail everyday. They'll keep up the push for every consumer to mortgage their future at subprime rates. Wait and see how big the next crash will be. Maybe this is what it'll take to build a sustainable economic system in lieu of a planet-raping one.
jakenewton opined "Of course we do [make stuff]. In fact, with the weak dollar, our exports are up substantially, lowering the trade gap. Why do so many people parrot this?"
Oh, gee, I dunno. Must be those 200,000 factory workers... err... I mean, former factory workers in Ohio who don't have jobs anymore. Or all those former factory workers in Flint, Michigan who don't even show up on the jobless reports anymore because their unemployment benefits have run out. Or maybe it was the 63,000 people (net) who got pink slips last month. Given that the economy normally needs to add about 150,000 jobs per month to stay even with population growth, that's a shortfall approaching a quarter of a million jobs. In one month.
Or maybe you yourself put your finger on the issue. If the dollar amount of exports increased because those dollars aren't worth much anymore, did those exports really incease? So let's see... even though the trade deficit was up in January ($58.2 billion as opposed to 57.9 billion in December), our exports did increase from $145.9 billion to $148.2 billion. Are those in adjusted dollars? The "dollar index" peaked at around 78 in December, but peaked around 77 in January. That's about a 1.25% decline, which, you know, kinda eats into the "increase" in exports.
Of course, the dollar index at 77 was the good old days. It now stands at about 72. Hey, but the dollar losing, oh, 8% or so of its value in 3 months shouldn't really worry anyone. After all, China's currency is pegged to ours, so we can keep buying cheap stuff at Wal-Mart no matter how badly our currency tanks.
But then again, buying stuff is only half the issue. The other half is getting back and forth to the mall. That's getting kinda expensive...
Let's do some math. A trade deficit of 58.2 billion per month translates to an annual deficit of just under $700 billion. That's a little less than $2500 per person in the country. So my little family of three's share of the deficit is about... umm... somewhere over $7000. Per year.
Sent to China and Saudi Arabia.
I think about this stuff. You should too.
When Obama or Clinton (on second thought, not Clinton) bring up and show beyond any reasonable doubt, how the Republicans have destroyed, and are continuing to destroy, the middle class, McCain will scream "TERROR" and be elected presdident. Uncle Sam can get rid of his red, white and blue top hat and replace it with one of those baseball caps made in the Philippines with the plastic fece on top and the word SHITHEAD across the front.
It's the terrorists' fault. Bush told us to go out and shop after 911, and we didn't do it.
About buying "made in the U.S.A." goods, don't bank on that actually being true. I read somewhere recently that companies such as Walmart label goods as "made in the U.S.A." when they are actually made somewhere else. Knowing how dysfunctional our government is (especially under Bush), I'm sure there's no enforcement mechanism for ensuring that such labels are truthful.
Question:
Is there anything that you progressives DON'T bitch about???
First you all bitch and bitch about how we are all over-consumers and we have an overindulgent, wasteful lifestyle. Now that we have to cut back you bitch that we're destroying the economy by NOT spending!
The economy is cyclical...get over it!
Thanks for the reminder. Sounds like, "Wellstone's Dead! Get over it!"
I'll never get over it, you miserable rat! And if you were nearby....
None of this would be happening if the march to free trade hadn't been undertaken as a unilateral move by the US. And if American labor got a better rate of return than capital.
Henry Ford, no progressive, understood that if his workers couldn't afford his product he was screwed. He paid them well enough that they could by a Model-T and he made money hand over fist as a result.
Had wages kept pace with dividends and interest there wouldn't have been a "slowdown." Bad policy has consequences.
There was a fairly fascinating (to me anyway) program on UCTV (University of California Television) on how for a number of reasons the "average consumer" has fewer and fewer options for economizing ... the most obvious being shrinking discretionary income and new "essentials" (particularly in the face of flat real wages for a decade.
Most folks have nothing the "cut back on" ... so they are forced to "do without." One of the points made was that Chinese (and other) imports have resulted in such low prices for things like clothes and electronics (compared to where these items would be priced in real dollars adjusted for inflation) that this gradual loss of discretionary income has been hidden, there's has been plenty of cheap stuff to buy permitting the shopping habit to continue. But, in reality, there's been less and less "give" in the average budget which is now routinely gobbled up right off the bat by things like mortgages, gasoline, telephone, taxes, health care contributions and co-pay -- y'know "necessities" if you can afford them at all. (part of that two tier economy as well, there are plenty who can't afford them or don't qualify or aren't eligible).
I've been facing quite a bit of that myself ... I buy almost nothing new (and haven't for well over a decade)... but food prices are rising and I won't eat packaged prepared food ... what to do?
None of this will change soon. Obama and Clinton if elected will keep the warm-hearted sympathies flowing while they pander and faun over the corporatists and financiers who elect them.
That's why I'm voting Nader again. It may take one or two more big losses to Republicans and one or two more decades of crushing decline of the "middle" class to get it. Oh well.
I highly recommend a 20 minute video called The Story Of Stuff.
It talks about our consumer culture and the damage it does.
http://www.storyofstuff.com/
We aren't just consumers. Time we started voting for people who talk about us as *people*, as employees, as workers and concerned citizens of a world facing terrible consequences if we don't *stop* gobbling up everything in sight. Yes, Obama has no solution, just more of the same.
I picture Cuba and their 60 year-old cars. Soon the dollar won't be worth the paper it's printed on and with everything purchased from overseas-including replacement parts-we better make sure we keep all those inscrutable tech manuals handy. Then we can send the kids out to the landfills (family values fun!) to scrounge up some of the stuff we've been tossing every time a new improved model hits the market and the few old timers with long unused skills can be useful again when the Fed repeals SS.
i think the Reverend Billy has it right...."STOP SHOPPING." reduce, reuse, recycle. recreate. we're certainly in for some interesting times...
"Jakenewton, have you actually tried to shop US only for everything you buy? "
No
"Or maybe your stuff just isn't coming to Canada (despite exports up, trade gap down)"
I doubt that. $190 billion in 2004:
http://en.wikipedia.org/wiki/Economy_of_the_United_States
$230 in '06, these figures don't include services:
http://www.state.gov/r/pa/ei/bgn/2089.htm
Another thing that America has been making since bush went into office is enemies around the world.
He's so good at exporting hatred.
"former factory workers in Ohio who don't have jobs anymore. "
How do you know they didn't find other jobs? And how does this support the idea that "We don't make anything in the US anymore."? We do. Now if you want to say that the manufacturing sector in the US is *in decline*, say that. Parroting extreme exagerations isn't very smart, think about that.
I live by the railroad tracks in a town about 75 miles east of Los Angeles; the BNSF main line to the east. There are lots of trains every day and almost all of them are containers on flat cars carrying names like Hanshin, China Shipping, Hyundai, etc.
Very few box cars go by any more, carrying things that we make here in this country. I recently made a long trip by train and it was eye-opening to see how many sidings have been torn up, sidings to buildings that used to have a factory or assembly plant (and workers) inside.
Sad what is happening to our country in the name of globalization, "free" trade and the corporate bottom line.
If some foreign power was to devastate our cities like some American corporations do, we would probably declare war.
What can we do politically? Vote for Change? Experience? 100 more years of war? The choices are divorved from the reality of our situation. I know! Ralph Nader, who actually addresses these problems, but no...I don't want to be called a spoiler...
Oh, and jakenewton...I'm sure some of those former Ohio factory workers did find jobs in the service industry. The good paying union job that dad to support his family is gone. He is now working in a tire store selling Korean tires and Mom is now working (she didn't before) in a fast food joint.
Dad used to make $22.00/hour with benefits.Now the 2 of them together make $16.50/hour with NO benefits. Hope one of their kids doesn't get sick or break a leg.
But, oh the wonders of post industrial capitalism! There are now two jobs where there was only one before.
We just have to accept that manufacturing is in decline!
I agree, arpedkedarki. I haven't gone shopping in so long I've forgotten how. I put ten bucks in my gas tank once a month, with a buck tip for the poorer than me person pumping the gas - of course being retired, I can get by doing this. I make one trip to the grocery store a week for the few things I really do need, and to the allergist for my shots once a month.
I stay home and watch a little of my (cheapest) basic cable TV, which is mostly religion, paid programming (nice name for hour long ads), and commercials, and I'm going to have to give it up before long if I want to keep buying those necessities; and I work in my garden, weather permitting. Oh, I do sit here at my budget dial-up connected, ancient-as-me computer to learn what's happening in the world.
"What do you mean, we do not make anything in America anymore? How about war, munitions? Bombs,missles,tanks,guns,bullets ect."
Actually, some of that stuff is made in China ...
Sad ...
But our corporations are happy - they are making record profits because of the weak dollar.
If the workers fail to unite on this one, I think all our children are about to learn first hand about sweatshop labor paying pennies per day.
There is something wrong with an economic system in which saving and recycling are considered a crisis. We have turned the wisdom of our founders ("Waste not, want not" and "A penny saved is a penny earned") on its head!
Yes, as others have written, we peddle weapons and death. We arm Ethiopia to attack Somalia, Colombia to attack its neighbors, Israel to atack Palestinians and Lebanon, Iraq to attack Iran (oops, that's "ancient history"), Turkey to attack Kurds (who are oppressed within Turkey), Pakistan & India, and arm kingdoms, dictatorships, and democracies-in-name-only to oppress their citizens and maintain their power, because they are friendly to multinational corporations. See the film, Lords of War to see the effects of our exports in a small nation.
Oh, did I mention crappy films(somebody else did), Coca Cola, and the pushing of tobacco cigarettes?
tlcs_3 -
I am going to take my bribe, er, I mean "tax rebate," and buy some seeds, garden supplies and start a garden so I will be able to grow my own damn food.
The irony is that our infrastructure is crumbling and there SHOULD be plenty of jobs fixing bridges, roads, and public spaces. There should be plenty of jobs taking care of children and the elderly and the sick -- oh, right, there are plenty of those jobs, they just pay dreadfully, often have no benefits, etc. There should be plenty of jobs in our new "clean energy" growth industry... but they're still largely "in the future" ... There should be plenty of jobs for teacher's aides, teacher's assistants, and in the schools to try to bring our education system out of the hole it's been in for years -- there are SOME jobs, but again most pay dreadfully, many are part time, offer no benefits ...
We're "paying" for not paying ...
"I'm sure some of those former Ohio factory workers did find jobs in the service industry. "
Don't tell me, tell Helix. And tell Helix I'm still looking for *real* support for the statement "We don't make anything in the US anymore.".
anne faith -
Yes, items made in the Mariannas Islands, specifically Saipan, do qualify as "Made in the USA." Does it matter that the workers are basically Chinese slave laborers? No, it didn't matter to Tom Delay when he went on vacation there .. I mean, went on "official" business there to help give breaks to the companies that have crap made there.
" ' We don't make anything in the US anymore.'
"Of course we do. In fact, with the weak dollar, our exports are up substantially, lowering the trade gap. Why do so many people parrot this?"
I think your line is as simplistic as the one above it. Exports have been up in nominal dollars each year over the last 13 years. Imports have increased faster. But when you compare the increase in imports to personal expenditures, you see that much more personal expenditure is probably going to imports than previously to domestic production. From '93 to '07, personal expenditure increased 117%. Imports increased 227%. Exports did increase 152%. Exports of services increased faster than goods, but goods still made up more than 60% of the increase.
I think the dollar falls because we manufacture less of what we want in the US. Of course, as you point out, this makes our exports cheaper, but because we import a lot, it makes our prices higher. Eventually, the dollar may go so low that it is too expensive to import so much. Perhaps then we will start to make those products here again, or just buy fewer of them. Perhaps we will lay off our Indian customer service agents. Who knows?
It is an interesting angle about how lower interest rates affect the elderly. I suppose they consume more of their principal, with all that entails.
btw, the numbers for import/export are calculated from the census bureau report and the numbers on personal expenditure are calculated from the BEA tables, both current for 2007.
"Eventually, the dollar may go so low that it is too expensive to import so much. Perhaps then we will start to make those products here again, or just buy fewer of them."
That's how these things tend to happen, we'll see.
In WWII, we had this little reminder on the radio many times every day:
Use it up.
Wear it out.
Make it do.
Do without.
That's because most adults were in the armed services or doing esssential work to keep our country functioning.
We're now in another kind of emergency brought on by Bush and his appointed minions of very little brain...
How can we buy American? Buy pizza! That's where all those people went when they lost their manufacturing jobs. You can stand right at the counter and watch your product being made in the U.S.A.(out of sauce made from Mexican tomatoes and cheese made from plastic by-products from India).