Monday, February 23, 2009

Post No. 90a: Articles of Interest: When Consumers Cut Back: A Lesson from Japan



Much has been made recently about the contraction of credit and the reluctance of consumers to part with their hard earned dollars because of their uncertainty about our economic future. The following article appeared in the February 22, 2009 electronic edition of the New York Times. It is most definitely food for thought. To view it, you need simply click here.


Since the original posting of this article, we came across another article expressing similar concerns about the reluctance on the part of the consumer to spend, albeit with respect to the automotive industry. To review Dave Leggett's article on his blog, Just - Auto, click here.

7 comments:

  1. Whoa, that article is really something to think about. My folks and many other people I knew went through the Depression of the 30's and they were not free spenders. Conspicuous consumerism may disappear, which could be death to a consumer driven economy. Hope this recession ends before everybody gets a complex.
    Thanks, Log

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  2. hmmmm, I can absolutely see this happening. I know I am very very careful of my spending and when I am reaching the end of my budget allowance for a particular area, I simply shut down till the next pay period.

    I do believe though, that our economy and our society values will not bring about the same level of change that you see in Japan. As a culture many of the citizens of the USA are not so driven by self control.

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  3. Thanks much Jonathan and Holly. Holly, you brought up an issue which Brenda Bowers, one of regular visitors, brought up when we questioned whether consumers would spend the extra income saved if tax cuts had been enacted. Her position, like yours, was that it was in our blood to spend, which you described as a lack of self-control. You are both probably correct. We Americans have to tendency to have fairly short memories.

    It may take a rather lengthy period of economic hardship to change our spending habits as a culture, and make them more like those of our parents and grandparents, who grew up in the Depression.

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  4. I was on Marketwatch.com's forums and I read all kinds of negativity there. But there was a man complaining about how the government was spending too much, that deficit spending was bad, that we were mortgaging our grandchildren's futures. Then, a few posts later, complained about Capital One raising the interest rates of 4 of his 5 credit cards.
    I guess it must be the other guy who's the spendthrift, eh?

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  5. Here's an interesting survey result that ties into this.

    Rasmussen Economy...

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  6. Funny thing is there were mostly two types of people who made it through the Great Depression. People like Jonathan Bert's folks whose scars made them careful to save and those like my mother who were just the opposite with the attitude that whatever hoard you have could be wiped away overnight so don't forget to live while you are still alive. She wasn't a spendthrift for herself but she was determined that her children would have all the toys, clothes, educational extras and in general things that she had missed. My mother was the first person to tell me about the story of the 2 men at the rich man's funeral. The first guy asks the second guy "How much did he leave?" The second guy says "He left it all". No U-Hauls behind hearses. So OK the Pharohs did take it with them but they didn't keep it and is anybody seriously going to say it did them any good?

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  7. PS I don't mean that she believed in going into debt to get those things.

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