Monday, March 2, 2009
It's clear that people are a lot tighter with their money these days, but how will consumers spend once the economy recovers? It's a relevant question to all of us who care about the well-being of workers and the health of the environment. Grant McCracken has an interesting post on this on The Atlantic Monthly's website. He proposes a few scenarios, including one where we trade down on some things in order to trade up on others, and seems to come to the conclusion in the end that we should all be thinking more about the environment when we consume. The nightmare scenario he describes is Japan, where people become permanently miserly. Especially after my recent trips to Japan to write my Atlantic piece and on research trips, I take exception to this, as, I believe, would economist Jesper Koll. In comments that sadly didn't make it into the piece, Jesper argued to me that Japanese consumption has actually been stable as a portion of incomes, and that one big factor driving down Japanese consumption has been the end of the consumer finance industry at the government's behest. In discussion of consumers in Asia in particular, I think we should be all be looking a lot more closely at the spending patterns of different generations, particularly as countries like Japan are aging a lot faster than other countries.