How I love the New Yorker Financial page
The clarity and honesty is often in line with my own thoughts on the economy. He answers the question of "have we learned out lesson?":
Of course, none of this precludes the possibility that our frugal ways will endure even after the economy starts to recover. But there are reasons to be skeptical. Recessions regularly give rise to assertions that consumers will begin spending more responsibly. Toward the end of the 1990-91 recession, for instance, Fortune reported forecasts of the “death of conspicuous consumption.” Time ran a cover story on the return to the simple life, arguing that “after a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down.” Consumer-behavior experts predicted that people would be more frugal in the nineties, and consumers themselves said they planned to cut back on spending. It didn’t happen. A decade later, the bursting of the Internet bubble and the impact of 9/11 led many to predict that Americans would consume less-and we all know how that panned out.
And...
...won’t this recession make Americans thrifty again? Maybe. But the current downturn, bad as it has been, is nothing like the Depression, which lasted a decade and saw unemployment hit twenty-five per cent. What’s more, the notion that the Depression turned Americans into tightwads is largely a myth. In fact, it was after the Second World War that America really came into its own as a consumer society. In the five years after the war ended, purchases of household furnishings and appliances climbed two hundred and forty per cent, while between 1940 and 1960 the rate of homeownership rose by almost fifty per cent. If the Depression didn’t make Americans wary of the pleasures of consumption, it’s unlikely that this downturn will.
So there go my dreams of the end of the consumer society. Full article
Of course, none of this precludes the possibility that our frugal ways will endure even after the economy starts to recover. But there are reasons to be skeptical. Recessions regularly give rise to assertions that consumers will begin spending more responsibly. Toward the end of the 1990-91 recession, for instance, Fortune reported forecasts of the “death of conspicuous consumption.” Time ran a cover story on the return to the simple life, arguing that “after a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down.” Consumer-behavior experts predicted that people would be more frugal in the nineties, and consumers themselves said they planned to cut back on spending. It didn’t happen. A decade later, the bursting of the Internet bubble and the impact of 9/11 led many to predict that Americans would consume less-and we all know how that panned out.
And...
...won’t this recession make Americans thrifty again? Maybe. But the current downturn, bad as it has been, is nothing like the Depression, which lasted a decade and saw unemployment hit twenty-five per cent. What’s more, the notion that the Depression turned Americans into tightwads is largely a myth. In fact, it was after the Second World War that America really came into its own as a consumer society. In the five years after the war ended, purchases of household furnishings and appliances climbed two hundred and forty per cent, while between 1940 and 1960 the rate of homeownership rose by almost fifty per cent. If the Depression didn’t make Americans wary of the pleasures of consumption, it’s unlikely that this downturn will.
So there go my dreams of the end of the consumer society. Full article