Caroline Baum
Bloomberg.com
I refuse to celebrate the “spectacle of hordes of shoppers schlepping through the mall at midnight,” said Caroline Baum. I know that consumer spending is 70 percent of the U.S. gross domestic product. But “if spending created wealth, Greece would be rich.” Our promotion of consumption “as the key to health and wealth” has whittled the savings rate from an average of 9.6 percent in the 1970s to 3.3 percent in the 2000s.
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I learned the value of thrift from my parents, who were children of the Depression, but younger people, buoyed by cheap credit, seem to spend without thinking. I partly blame the Federal Reserve, which has discouraged saving by keeping its benchmark interest rate near zero. When consumers “aren’t getting paid to save,” they spend. But many economists still encourage borrowing and spending as a cure-all for the economy, cheering as “mall rats infest stores in the middle of the night.”
One definition of “consumption” has to do with wasting away from tuberculosis. The next time I see the market applauding consumer spending, I’m going to remember that meaning.
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