The new austerity. The great reset. The new normal. While America was suffering through the financial crisis, a chorus of economists, consumer behavior experts, and journalists predicted that the psychological scars of the Great Recession would permanent change spending habits (and they were quick to stick pithy labels on this supposed phenomenon).
But now here comes this, from WSJ.com:
A non-scientific study of Commerce Department data suggests that in February, U.S. consumers spent an annualized $1.2 trillion on non-essential stuff including pleasure boats, jewelry, booze, gambling and candy. That’s 11.2% of total consumer spending, up from 9.3% a decade earlier and only 4% in 1959, adjusted for inflation. In February, spending on non-essential stuff was up an inflation-adjusted 3.3% from a year earlier, compared to 2.4% for essential stuff such as food, housing and medicine.
During the crisis, pundits talked as if consumers would return to depression-era habits, and just hoard all the essentials. Yet, we’re now spending nearly three-times more on non-essential items than we did during the post-WWII boom. It’s surely promising that consumers are confident enough in their economic future to splurge on pleasure boats and booze. And these habits are surely good news for workers in those industries.
But if the world economy tanks again, 2008-style, let’s not forget the false promise of austerity.