Abstract:
Editorial Director Paul Deffenbaugh suggests that American consumers who are now saving at a greater rate will be looking for very different housing when the home builder recovery comes.
Publication Date:
Mon, 2009-08-31 19:00
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Paul Deffenbaugh, |
Apply the same logic to food. Same meals on a regular basis will significantly reduce costs. In fact, I think I could drop my expenditures on daily necessities down to a pittance. (A "pittance," by definition, is a whole lot less than what I'm paying now.)
I'm not particularly frugal, nor am I a spendthrift. I like to save pennies but won't pass up a nice meal for a bit of porridge. In these tough economic times, frugality has taken on increased importance. People truly are trying to reduce — reduce their expenses, reduce their debt, reduce their waistlines. My friends who work in libraries are seeing booming business as people look for cheap entertainment.
Our economy is driven by consumer spending. The world would love to see the American consumer go shopping so that the economy would be revitalized. But I have to argue that there is something inherently wrong about that idea.
Our spending habits have outgrown our income habits. We have pushed ourselves into a bind, and the devotion Americans showed for spending heavily on real-estate over the middle years of this decade pushed that spending habit over the precipice.
It didn't start there, of course. The pattern of increased spending has trended upward since World War II. You can see it in increasing home sizes and fast food restaurants that introduced the super-size meal. They learned they could increase margins by making the portions larger.
| The trend to save more and spend less will significantly change the housing market — if the trend lasts. |
What's happening now is that readjustment. If the adjustment is permanent — if we continue this trend to saving more and spending less — we'll see Americans' ideals of homeownership become more moderate as well.
