The economy: When the spending ends

The great American shopping spree has come grinding to a halt, said Mindy Fetterman in USA Today. Since the financial panic hit, scuttling stock portfolios and sending a shudder through neighborhoods rich and poor, Americans are “cutting back on almost all fronts.” A USA Today/Gallup poll found that 55 percent of Americans say they’ve cut household spending, especially on travel, restaurants, and movies. Data confirm that these are no idle threats: Retail sales declined 2.8 percent in October, a record drop. Even among the wealthy, said Alex Williams in The New York Times, conspicuous consumption is suddenly unfashionable. Ostentatious diamonds, $2,000 handbags, and long weekends in Aspen and Anguilla are out. “It’s now chic to cut back,” said Alexandra Lebenthal, president of a wealth-management firm in New York. Luxury, added designer Orit Kaufman, has begun to feel “like a dirty word.”

Don’t expect yuletide cheer to improve things, said Stephanie Simon in The Wall Street Journal. Across the country, hard-hit municipalities are sacking Santa Claus, eliminating decorations, and cutting holiday celebrations in order to save money. An agent for freelance Santas said bookings are down 50 percent. In Warren, Mich., home to many auto-industry workers facing the threat of unemployment, the annual tree-lighting festival has been scaled back. Mayor Jim Fouts has asked residents to pitch in to provide such services as free horse-drawn carriage rides and Christmas caroling. “It’s about people giving,” he said, “without taxpayers having to.”

Amid all this gloomy talk, I can feel “my consumer confidence draining away,” said Michael Kinsley in The New York Times. Just the other day, I saw a fancy coffee maker I’d once coveted on sale at Linens ’n Things, but I decided I didn’t really need it. But was my newfound thrift in our nation’s best interest? “Without consumers to lead the charge,” we’re told, the economy won’t recover. But we’re also being told we’re a bunch of reckless spendthrifts who don’t save anywhere near enough money. So which is it? “Should I buy that coffee maker to stimulate the economy? Or should I save my money in order to ‘grow’ the economy and provide for my old age?” The economic gurus seem to be advising us to spend now “to avert various short-term disasters” and then “turn around and start saving like mad, to avert various long-term disasters. In other words, we need to get back our consumer confidence, and then lose it again.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up