The Problem With The Economy
Perhaps the one big problem with the economy is one that the Fed can’t fix: our consumer-based economy is shifting from one of excess to one of thrift. Many consumers — particularly younger consumers — no longer desire material items, but rather experiences. And the items that they do purchase, are purchased at a discount.
Even Generation Y is not spending the way that teenagers did back in the early 2000s. Perhaps the days of grunge and anti-brand names are back. Look at the rising popularity of Lorde and Macklemore — less “bling” is in.
Saving Is In
Getting a “deal” seems to be the style of the day. No longer do I hear people bragging about how much they spent on something. Nowadays, people who overspend are looked at as non-tech savvy — unable to search the Internet for deals. It’s not unusual to sit around and talk about great deals that were found. We’d rather save than spend.
Across the board, Americans have made saving for retirement their top financial priority:
Kids Are Changing Too
In the late 90s, the hopes of the US economy rested on the kids of the baby boomers. They made up a huge block of consumers, and had a lot of disposable income. Future company earnings could be predicted simply by what teenagers were buying.
Today, ask any teenager what the next big trend is, and they will likely tell you “nothing”. They really aren’t buying anything en masse, with the exception of a few major purchases (cell phone, Play Station 4, etc).
Teens today seem to have embraced the 2014 version of grunge. Plaid flannel shirts are even making a comeback! Name brands are slowly disappearing again. And teens today are spending less than their Gen X counterparts did across all major categories.
Source: Bureau of Labor Statistics
As a child, I hit my teenage consumer years in the late 1980s to early 90s. Christmas and birthday lists were full of items — Omnibots, Nintendo Gameboy, Transformers, Nike and Jams shorts. Just watch an episode of The Goldbergs for all the cool stuff we had. (By the way, The Goldbergs is one of the funniest shows on TV. My family and I LOVE it!)
Today, my kids would rather play free or 99 cent apps. Name brands, for the most part, do not interest them. And as a parent, I want them to experience life. Instead of buying toys I think they might enjoy, I’d rather take them on trips — or even down to the Potomac river for an afternoon of fishing.
The problem with the economy is due to shrinking materialism. (This may actually be a good thing, in a parental, “big picture” kind of way). This is a cultural shift that may last years or even decades until either materialism comes back, or the US shifts from a nation of consumers to a nation of something else. This is a problem that the Fed’s monetary policies will, unfortunately, have a hard time fixing.
Thanks for reading,
PS: Would love to hear from others. Are you seeing a shift toward thrift and experience — or is something else causing the problem in the economy?