Is it possible? Can this country’s insatiable appetite for consumer goods be slowing down? No! Surely not! US News & World Report’s Alpha Consumer, Kimberly Palmer took a look at consumer demand and its relationship to cheap credit.
Only twice since 1965, despite half a dozen recessions, have Americans spent less in a year than the previous one. Indeed, it often seems that we have defined ourselves by our ability to buy supersized everything, from McMansions to tricked-out SUVs to 60-inch flat-screen televisions—all enabled by decades of cheap credit.
Now that the credit party is over, how are consumers reacting?
“The process of bringing our wants and our needs into realignment,” says Merrill Lynch economist David Rosenberg, “is going to involve years of savings and frugality.” Or, to put more it more simply, “there is an anti-bling thing going on,” says Marian Salzman, chief marketing officer of Porter Novelli.
Of course, if you’re broke and have no access to credit you don’t have much choice but to be frugal, but is that all that’s going on here? Or are consumers tired of being pressured to take on massive debt in order to “super size” and “bling” everything? What do you think? Is credit card consumerism over?
Is Starbucks’ “free refills” offer the new “super size it”?
(Full disclosure: I’m quoted in the article, and yes… yes my first car was a Geo Metro. It’s true. Despite what “FreeCreditReport.com” would have you believe, some people do choose to drive them. And they also get their credit reports from www.annualcreditreport.com.)
The End of Credit Card Consumerism [US News & World Report]
(Photo: tokyohanna )
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Americans spending less is a good thing. Maybe now they can start spending what they can actually afford. I see no problem in that.
@Victo:
Credit cards are not evil, but the cc companies that use predatory practices, like double cycle billing – which charges interest on money you already paid off, changing due dates to trip you into late payments, boosting interest rates because you are maxed out on a different credit card, etc. are evil practices that must stop. They prey on the ignorant, and make money hand over fist, and when they get in trouble, they go to congress for a bailout.
@darkryd:
And let’s think of all the things that you can not do without a credit card:
- Purchase any items online
- Rent a car (without paying up to $200 out of pocket for incidentals)
- Stay in a hotel (without paying out of pocket for incidentals)
- Buy a airline ticket (most ticket agents do not accept cash/check)
- Rent a Moving Van
- Change of Address on USPS.COM
Enjoy being ostracized by our consumerist society for not having debt!
No, it is not over to any extent.
Some people are worried, or in trouble, and as such they are spending less. People who are doing well are seeing how others are affected, and they are also laying a little low. Credit issuers are cracking down and making life difficult for people who run up their bills and that is surely hurting sales from people who buy things they can’t afford. When the economy recovers, frivolous spending will gradually follow.
I wonder, though, if people are slowly starting to realize the value of well-made high-quality products. Products like the iPhone defy the current market.
@balthisar: Did you ever see that list of major corporations that pay like $12 in property taxes and receive gov’t subsidies because their thousands of acres are put into ag exemption? They are the same ones that get tax abatements to build factories. Another good one is that companies whose CEOs avoid income tax by taking $1 in pay and millions in stock options.
Major corps avoid taxes like you wouldn’t believe.
Personally, I think people should spend more. That way, when they lose their houses, I have a better chance of getting one for less money.
Also, if anyone is reading this and is going into retirement and is an older person (like say, over 65), can you please message me? I promise I won’t offend your sensibilities, I just have some questions about retirement.
@: There’s a really, really simple way to avoid all of that. Don’t use a credit card.
@: For most of those, a debit card will usually suffice. I’ve bought airline tickets, booked hotel rooms, rented cars, moving vans, etc., with one. If they want to put a hold on the card, don’t consent to anything that actually allows them to withdraw money, don’t consent to anything greater than the estimated charge and get it put in writing when the hold will be released and/or applied to the balance. FWIW, out of all of this, I have only had a hold placed once and have been asked for a minor deposit ($25-50, applied when I returned the truck) a couple of times. BFD.
Not to mention, if more people ditched the plastic, it might just force these companies to going back to the way they used to do business. They changed their policies to be more convenient to them because they assume everyone these days has a credit card. They are still subject to charge backs, fraud, etc., when someone hands them a credit card.
I drove a Chevy Sprint through 2 University degrees – it’s an ideal student car – cheap to buy, cheap parts, cheap on gas and you can’t go too fast. Of course – mine was only 3 years old when I bought it – the same car would be closing on 20 years old today, like the one in that commerical.