Author Topic: Article - Americans Spend More on Stuff They Don't Need  (Read 5090 times)

dude

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Article - Americans Spend More on Stuff They Don't Need
« on: November 02, 2015, 06:58:02 AM »
Hardly news to anyone on this forum, but interesting nonetheless:

http://www.bloombergview.com/articles/2015-11-02/americans-spend-more-on-stuff-they-don-t-need

sleepyguy

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #1 on: November 02, 2015, 07:14:37 AM »
Advertising, 'cheap' lending rates... and blurred lines to what is 'essential'.

Go to your coworker and tell them you cancelled Cable TV... you'll get a look like you are some kind of alien or something, lol.

new mustache city

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #2 on: November 02, 2015, 09:41:14 AM »
Quote
Whatever the explanation, the message for a fragile global economy is the same: If you want it to keep growing, you'd better hope Americans keep buying stuff they don’t need.

I am an idealist and an optimist and I hope to see the end of frivolous spending and overconsumption in our global society eventually. However I realize this will also have serious implications for the economy and in particular my investments. Does anybody else feel similarly? Are there alternatives to market investing that have a reasonable rate of return and don't bank on people continuing to overconsume at increasingly greater rates forever? The whole idea that the growth of the economy and my portfolio depends on a majority of people wasting money and resources ultimately just to generate more trash and pollution is disconcerting to say the least.

mozar

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #3 on: November 02, 2015, 10:16:21 AM »
Well on the plus side, only a fifth of consumer spending is considered unnecessary, which is less than I thought. So when people do finally stop buying unnecessary crap it won't necessarily mean the end the economy.

Quote
Are there alternatives to market investing that have a reasonable rate of return and don't bank on people continuing to overconsume at increasingly greater rates forever?

No. Our type of capitalism is based on an ever expanding economy. "Growth" means buying more and more. I think we are hitting our limits already which is why companies are looking to China and India for more "growth." Eventually, rates of return will go down, but I don't think it will get as bad as Japan, with an average stock market return of 2%.

James

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #4 on: November 02, 2015, 10:32:07 AM »
Well on the plus side, only a fifth of consumer spending is considered unnecessary, which is less than I thought. So when people do finally stop buying unnecessary crap it won't necessarily mean the end the economy.

Quote
Are there alternatives to market investing that have a reasonable rate of return and don't bank on people continuing to overconsume at increasingly greater rates forever?

No. Our type of capitalism is based on an ever expanding economy. "Growth" means buying more and more. I think we are hitting our limits already which is why companies are looking to China and India for more "growth." Eventually, rates of return will go down, but I don't think it will get as bad as Japan, with an average stock market return of 2%.


Growth comes in many ways, not just consumption. You could get growth by producing more valuable items, by adding to the population (birth or legal/illegal immigration), etc. Not that you don't have a point, just saying it's more complex than "buying more". For example, I mountain bike so lets go there. 4 people decide not to buy $500 cheap mountain bikes, but two of those people buy $4000 carbon mountain bikes. That would be 50% drop in buying stuff, but a 100% increase in growth. I know the numbers are just pulled out of my ass, but you get the point.



Over time this is what I would like to see. Not drop in growth, but drop in crap. We can continue to spend huge amounts of money, just producing less crap and more valuable and better made items in a ecologically safe way. Not that I see us heading that way, but I can dream... :)

Retired To Win

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #5 on: November 02, 2015, 05:48:43 PM »
Quote
Whatever the explanation, the message for a fragile global economy is the same: If you want it to keep growing, you'd better hope Americans keep buying stuff they don’t need.

I am an idealist and an optimist and I hope to see the end of frivolous spending and overconsumption in our global society eventually. However I realize this will also have serious implications for the economy and in particular my investments. Does anybody else feel similarly? Are there alternatives to market investing that have a reasonable rate of return and don't bank on people continuing to overconsume at increasingly greater rates forever? The whole idea that the growth of the economy and my portfolio depends on a majority of people wasting money and resources ultimately just to generate more trash and pollution is disconcerting to say the least.


MMM has written about this is some of his blog posts.  Basically, he shows that it's fallacious thinking to posit that big time consumption / overconsumption / ever-expanding per capita consumption is required to maintain a healthy economy.

And I agree.

powskier

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #6 on: November 02, 2015, 10:18:33 PM »
Keep on buying folks, my VTI demands it.

Stop buying stuff folks, our planet demands it.


new mustache city

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #7 on: November 03, 2015, 07:34:19 AM »
MMM has written about this is some of his blog posts.

Got any links?

2ndTimer

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #8 on: November 03, 2015, 07:41:12 AM »
I would guess that some of this is pent up spending from the past few years.  When you are feeling concerned about your job, you cut the inessential spending.  When you are more secure you reinstate it.  I can testify that I am looking hard at expensive audio equipment and a better piano.  Bet I will have both within five years.

cube.37

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #9 on: November 03, 2015, 07:50:11 AM »
MMM has written about this is some of his blog posts.

Got any links?

Here's the link. Need to review it myself to see if I agree.

http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

[Edit after reading: I remember back in my Econ 101 course, the Professor and the textbook both stated that it was individual savings that drove the economy. Below is a link to another article (albeit, written by a journalist) I just read that is interesting and also somewhat contradictory because it opposes various aspects of Keynesian economics:

http://www.forbes.com/sites/beltway/2013/01/30/think-consumption-is-the-engine-of-our-economy-think-again/

"There are important lessons for public policy that come from these classical insights. Any program which accelerates the consumption of value, or worse, the destruction of value, ultimately make our society poorer. Despite what Keynes and his modern followers claim, Wars, natural disasters, terrorist attacks, faked alien invasions, or programs that encourage us to destroy our used cars — all make us poorer. These schemes reduce the amount of valuable goods and services available for society. Some may consider unemployment benefits to be a necessary policy on humanitarian grounds, but they by no means “stimulate” the economy. The recipient, after all, is consuming without producing any value for others. Disincentives for people to be productive, which have exploded in recent years, not only reduce employment, but reduce output and growth as well. This last point used to be widely believed by economists–including the immensely popular and polarizing economist, Paul Krugman, whose own 2009 textbook blamed extended unemployment benefits as one of the main reasons for decades of European stagnation and high “structural” unemployment. Now, I fear that a decade of Keynesian macro follies may have brought Eurosclerosis to America."

]
« Last Edit: November 03, 2015, 08:10:01 AM by cube.37 »

TheAnonOne

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #10 on: November 03, 2015, 10:25:21 AM »
This article said that the growth rate, not absolute amount, was greater...

If someone spent 1,000 last year and 1100 this year on needed items
...and
100 on unneeded items but this year spent 150

They would fall into this category. Even though the absolute amount was greater on needed items by a large margin. In addition to that, the absolute GROWTH of the needed items was larger as well. (In my example)

The only thing that was larger was the percentage rate. Which is only so useful and would require many, many repeated years to really add up.

RangerOne

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #11 on: November 03, 2015, 12:29:51 PM »
I don't think we have to worry about consumers getting smart any time soon.

Most of us are still happily taking out loans for $30k cars and eating and out/drinking regularly. At least in the cities I live in. I'd say the only thing the millennial generation is holding back on is buying houses.

Buying luxuries and working till 65 is pretty ingrained in American culture. I hate to keep coming back to cars but it really is the most glaring example of needless spending. Just count the number of SUV's, Trucks and Luxury vehicles on the road. There aren't enough high paying jobs to justify that many $30k plus cars...

I am also pretty sure 401k saving is fairly bad, which is a tad terrifying considering my generation will not have any pensions to fall back on. I think most of the software engineers I work with tend to max out their 401k's but I haven't taken a poll.

steveo

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Re: Article - Americans Spend More on Stuff They Don't Need
« Reply #12 on: November 03, 2015, 01:14:53 PM »
I don't think we have to worry about consumers getting smart any time soon.

This is my thoughts as well.

 

Wow, a phone plan for fifteen bucks!