With only the rich left to consume in quantity, the average US citizen is adopting a new spending pattern...
LAST FRIDAY the feds released a jobs report. It said that things weren't as bad as we all thought. The US economy actually added 103,000 new jobs in September, writes Bill Bonner, founder of the Daily Reckoning.
But wait. That is not a lot of jobs. There are about 150 million people who make up the labor force. This number increases – by immigration and population growth – by about 1.2 million per year. So, 100,000 new jobs doesn't do much to restore full employment.
But it's better than nothing. And nothing was what the figures showed for the month of August. Those figured were revised upwards too – to show 57,000 jobs created in that month.
Investors were blasé. The Dow fell slightly on Friday. The yield on the 10-year US government note ended the week over 2%. And gold finished trading on Friday at $1,635.
The newspapers were more enthusiastic. They widely reported the job numbers with approval and hope. Stabilizing prices and new jobs mean that the odds of a 'double-dip' recession diminished, they say. But so what? Recession is not the problem. Recession refers to GDP growth. It measures "more" or "less." An expanding economy uses more resources and produces more stuff. A shrinking economy – one in recession – produces less stuff.
But what if the real problem had less to do with how much stuff we have and more to do with what kind of stuff it is? If you have another car or another refrigerator, are you better off? What about another gall bladder operation or another war? Or maybe you'd like another gadget from China or another helping of dessert?
You would have more stuff. Would you be better off? Not necessarily.
And a lot of people are turning against it. And if they're not, they should be. Partly because they can't afford more stuff. Partly because they have enough already. And partly because stuff is getting in their way.
Here's a dictum: people come to think what they must think when they must think it.
When it no longer pays to build more stuff...
And when people can no longer afford to buy more stuff...
...Stuff will become unpopular.
Already, according to TIME magazine, the average American is spending 2% less on goods and services than he did 4 years ago. That is a big change in a consumer economy.
And he's shifting the focus of his spending too. Expensive foreign-made cars are not selling like they used to. He's not traveling overseas as much either. Nor is he going to theme parks and sporting events.
Instead, he's staying at home and watching TV.
And here's something interesting...the number of farmers' markets is way up.
Why? Because the consumer has shifted from more to better. He doesn't want more food; he wants better food.
And he's spending more on games and communication devices too. Apparently, people consider these things important to the quality of their lives.
There's also a new trend developing in housing. The big, gaudy McMansion is giving way to the small cottage with charm. Big houses are hard to heat and expensive to keep up. And they're also not very cozy. Small houses, on the other hand, can be more comfortable...and more fun to live in, if you like the people you're living with.
Ostentatious wealth is probably falling out of fashion for another reason: it is becoming a political target. The rich are few. But their unpopularity is a measure of their wealth, not their numbers. They are becoming an unloved, vulnerable minority, widely blamed for the economic crisis, with few defenders in public life. What can they do? They sit in their guarded enclaves and wait for the mob to rise up against them.
Some try to coddle favor with the masses by giving money to charities and even offering to pay higher tax rates. Others lie low...drive old cars...and renew their passports.
But what's this? While the middle classes hunker down and spend less...the rich continue to splash out. They want better too – better stuff, with brand names on it!
Protestors may complain about them. The Democrats want to 'sock it to them' with a big new tax. And the man on the street figures they've put one over on him.
But they should all thank the rich, not damn them. In a consumer economy, who else can consume?
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