SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
We are a nation of consumers. Buying stuff is by far the largest part of the U.S. economy - 70%. And we're not slowing down. News out this week found that retail spending jumped again last month to set yet another all-time record. Since the pandemic, we have been buying more stuff than ever before. And now our supply chains are in crisis.
ALLISON SCHRAGER: I think this moment will pass, but I think it's worth reflecting. Is it healthy to consume this much?
VANEK SMITH: Is it healthy to consume this much? Today on the show, we talk with economist Allison Schrager about consumer spending, supply chain fails and holiday shopping.
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VANEK SMITH: Let's see. Before we get started, do you mind describing where we are right now?
SCHRAGER: We are in Union Square in New York City.
VANEK SMITH: And of course, this is one of the busiest shopping areas in New York.
SCHRAGER: Yep. There's a Best Buy. There's a shuttered Forever 21. There's a Designer Shoe Warehouse. And there's a Sephora.
VANEK SMITH: And, Allison, I asked you to meet me here because you just wrote a column for Bloomberg about consumption. And you said, you know, maybe it is time for Americans to start buying less stuff - or at least different stuff. And before we started, you wanted to be very clear that you are not against U.S. consumerism per se.
SCHRAGER: I mean, I'm an ardent capitalist. I think people should live the life they want, and they should, you know, consume what they want. I love economic growth more than anyone.
VANEK SMITH: We're sitting in a city that is literally a - like a...
SCHRAGER: Consumption Mecca.
VANEK SMITH: Yeah.
SCHRAGER: That's why I live here.
VANEK SMITH: (Laughter).
SCHRAGER: I'm very supportive of it. But what's interesting is, if you look at the data, it's not just that we're spending more on stuff. Stuff got cheaper as we started spending more. So we just got a lot of stuff. So our houses also got bigger 'cause we need somewhere to keep it all.
VANEK SMITH: Like, a lot bigger?
SCHRAGER: The average household in 1980 lived in 1,700 square feet. Now they live in 2,000 square feet. And keep in mind, households have gotten smaller. So I think it's worth wondering if maybe we should revisit our relationship with stuff. For instance, like, there is a big push to make us more resilient and pull back on global trade, maybe sort of lose some of that efficiency, which means things are going to cost more. And also, I mean, if we really are truly concerned about the environment, that involves actual sacrifice. It's not just buying an electric car. It means maybe consuming less.
VANEK SMITH: I mean, I feel like what you're saying in certain ways is, like, American sacrilege, I mean, 'cause consumption is, like, what we do. That's, like, what we do as a country.
SCHRAGER: Yeah. I have the Twitter mentions to prove it on my Bloomberg column. People were really angry. One of the statistics I read was that our consumption of clothes has increased fivefold since the '80s. And not only that, the average piece of apparel is only worn seven times before we get rid of it.
VANEK SMITH: People own five times more articles of clothing than they did in the '80s.
SCHRAGER: Yes, and...
VANEK SMITH: It's not like the '80s were a time where we weren't consuming that much.
SCHRAGER: No, it was hardly a time of restraint.
VANEK SMITH: Well, and also the rise of all the digital products, like gaming devices and laptops and phones and...
SCHRAGER: We're constantly upgrading and throwing out.
VANEK SMITH: ...Earbuds and...
SCHRAGER: So if we really are serious about being more green, I mean, maybe we should think about not buying so much stuff so we throw out so much stuff.
VANEK SMITH: What are the economic implications of that, though? - because I mean, our economy, like, counts on the GDP growing. The GDP is a sum total of all the goods and services our economy produces.
SCHRAGER: We could spend the same amount but buy higher quality stuff. Also, really, it's not sustainable. Sustainable growth comes from building new things, new innovation. And traditionally, what made the U.S. economy so successful was that we were great innovators of coming up with new, better things. And what made U.S. consumers so special wasn't that they just bought lots of junk. It's that they were very open-minded to new things. We were always the country of early adopters.
VANEK SMITH: It seems like that's still happening with Silicon Valley.
SCHRAGER: It is. It is. But that doesn't mean we need high volume, though. These are two separate things. And that's really what can fuel much more healthy, sustainable growth is more productive ways of using resources and coming up with new stuff rather than, you know, a shirt you're only going to wear twice.
VANEK SMITH: As you said early in our conversation, this is the site of an ex-Forever 21. And there have been a lot of pieces about, is this the end of fast fashion and things like that? I mean, do you think we're moving in that direction as consumers or no?
SCHRAGER: I don't know. I hope so. I don't think so. Isn't fast fashion - you know, it's nice to get that fun, trendy piece. And then, you know, you get tired of it. And you throw it away.
VANEK SMITH: And it only costs $15 anyway.
SCHRAGER: Yeah. So I think it's very seductive. But maybe our culture will change this time of sort of not having stuff like we used to. And again, I think it will pass - is to maybe reassess how we consume.
VANEK SMITH: I mean, we're coming right up on the holiday season. This is a time when a lot of retailers earn, like, up to 20% of their income for the whole year. Do you think this is all coming to a head? I mean, sometimes, it does take a big event to have us change direction or reevaluate things.
SCHRAGER: I don't think it is. I think, again, this is a temporary blip, and it will get worked out. And it's hard to change habits. I think what could change it are these structural things where things just get more expensive because of inflation, because of taxes, because of just a decision to trade less. You know, sort of - this increased global trade really meant things got a lot cheaper. So if we decide as a country that we're going to make goods more expensive, that could change. But I don't think our culture is going to change unless something like that happens.
VANEK SMITH: Do you think we'll be making more stuff in the U.S. as opposed to having stuff overseas?
SCHRAGER: I mean, that's certainly a goal of policymakers right now. I think they also have to be aware that there are trade-offs of that. You know, this hyper-globalized, you know, supply chain we have made things really cheap.
VANEK SMITH: I mean, it is funny when I think about, like, kind of what we do as a country is buy stuff. Like, that's our thing. That's our contribution - is that we buy stuff. Do you think that's going to change or be modified or - I don't know, what do you see going forward?
SCHRAGER: Probably not 'cause I think a lot of - you know, we tend to deal with anxiety by shopping.
VANEK SMITH: (Laughter) Is that true?
SCHRAGER: Yeah. I mean, isn't it? And I'll admit, I, you know, get a little rush buying something.
VANEK SMITH: A little soothing.
VANEK SMITH: I mean, same. And it does kind of make sense that our consumption went up so much in the last two years at a time when we were all experiencing a ton of anxiety.
SCHRAGER: Especially 'cause people still weren't consuming as many services, so they're still a little gun-shy about taking that trip, about going out to dinner. But we have a lot of money, and we're no longer just in sweatpants. So people are trying to buy stuff like crazy.
VANEK SMITH: If we continue in this direction, is that bad? What does that mean?
SCHRAGER: I mean, there's different ways you can grow. And the best kind of growth comes from innovation and entrepreneurship. If we're going into a lot of debt to buy a lot of crap, you know, that might not be the best form of growth. As I said, one of the things that does concern me is that, you know, if interest rates go up and all the debt we're running up becomes unsustainable, taxes are going to have to go up. And a likely place is going to be consumption taxes.
VANEK SMITH: So, like, a sales tax.
SCHRAGER: Exactly. And, like, that's one of thing - reason everything's so expensive in Europe. They pay more for everything just for that tax. So if that happens, it might force us to reassess what we're spending money on.
VANEK SMITH: What do you think of the future of consumerism in the place of the U.S. economy? Do you think that's always going to be our thing, buying stuff?
SCHRAGER: Yeah, I think it will be. I just think, you know, there's nothing wrong with maybe switching to higher quality, long-lasting things. So we could think more about quality versus quantity.
VANEK SMITH: Have you changed your own way you shop?
SCHRAGER: No, not really. But, you know, I live in New York, so I have different consumption patterns than most Americans because we all live in small apartments.
VANEK SMITH: That's true. If you buy a lot of stuff, you have to haul it up a lot of stairs.
SCHRAGER: Yeah, and I don't have the floor space.
VANEK SMITH: You have to get on the subway with it (laughter).
SCHRAGER: Yeah, it's not happening.
VANEK SMITH: I know.
This episode of THE INDICATOR was produced by Brittany Cronin. It was fact-checked by Taylor Washington. Our senior producer is Viet Le. The show is edited by Kate Concannon. And THE INDICATOR is a production of NPR.
VANEK SMITH: It's a white pigeon.
SCHRAGER: Oh, wow. It's a dove.
VANEK SMITH: Oh, it's a dove. Hi.
SCHRAGER: You know, also consumers.
VANEK SMITH: Also consumers, yes - secondary consumers.
SCHRAGER: Secondary consumers enjoying our castoffs.
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