America's love affair with consumption has run afoul the economic crisis. This may be the end of an era remembered for President Bush's advice when asked, after the 9/11 attacks, what Americans should be doing. He urged Americans to keep shopping.
Consumption may be equated with patriotism, but consumption has taken a hard hit in the current economic crisis. It has created a kind of vicious cycle in which hard times reduce spendable income, which reduces purchasing, which reduces production, which piles up inventories, which leads to company closings and layoffs, which reduces purchasing power, which — well, you get the idea.
Nowhere is the blow to consumption more evident than in the auto industry. Sales of new light vehicles dropped 32 percent in October, compared to the previous year. That threatens the viability of the Big Three automakers.
An infusion of bailout cash, not yet sure, could help stave off bankruptcy but does not itself ensure buying. Democrats in Congress and President-elect Barack Obama have called for a new stimulus package to encourage buying. But the roughly $150 billion being talked about would include money for Medicaid, unemployment and food stamps. That would not go very far to make up for a spending shortfall estimated at $400 billion by The New York Times and would not do much for the car market.
Early prospects for a revival of consumer spending do not look encouraging. The Pew Research Center reports a sharp increase in the number of people planning to rein in their spending. And more people say Americans should learn to live with less.
It is hard to overestimate the impact of the decline in consumer spending, which has represented 70 percent of America's gross domestic product. Undoubtedly, there will be a recovery. But America may no longer be the wonder of the world as the greatest shop-until-you-drop nation.