Today marks the start of the Christmas buying season. I wanted to write about how this has changed over the years and how a reliance on consumption is simply not going to boost our economy into a Recovery. However, someone beat me to the punch more than two years ago in a somewhat obscure blog. The lesson instead is that the truth is out there in hundreds of blogs contributing to the collective wisdom of our nation and its economic future.
While doing some research this morning I stumbled upon the Left Business Observer, a blog out of Brooklyn that appears to have been dormant since May of this year. That’s terribly sad because they had a lot to add to our national discussion.
Consumption grew as a share of our GDP, rising from 62% in 1980 of our economy to 70% by 2003. It is reasonable to assume that this is not necessarily a sustainable figure, given that it is historically quite high. Relying on consumption to get us out of the Depression we find ourselves in should be viewed at least skeptically.
But what makes up that consumption? The good people at Left Business Observer broke it down and found that what’s grown during that period is not consumer goods but our expenditures on health care. This fits with the simple observation that since 1947 Retail Sales has remained about 10-11% of our economy, with almost no change. As with any discussion about our economy the truth lies buried in what we are measuring.
Please read this article. It’s devastating.
It also fits with something that has been an undercurrent in our culture at least my entire life – I was born the day that “A Charlie Brown Christmas” first aired. If good people were worried that Christmas had become too commercial back in 1965, what has really changed in the last 45 years? Has it in fact become far worse? Looking at it from a dollar figure, the short answer is “No” – if anything, we may be getting a lot more for our money today than we ever did. Mazeltov!
What’s disturbing about this analysis is that our politics has progressed through a wrenching discussion about health care and its role in our lives without this kind of sturdy analysis. I’ve said many times that reducing overhead is the most powerful tool we have to create jobs and I’ll stand by that – knowing that health care costs are the largest single contributor to that overhead. But did we hear that from our “leaders”? Did the Republicans participate in what is clearly a critical discussion about the future of our economy and provide the own alternative answers? Not one bit.
I wanted to write a piece about how consumption isn’t going to come back and lead us on the path to Recovery, but I can’t. There’s something far darker deep inside how we measure, report, and ultimately do something with the vast array of numbers in front of us. Consumption, in the abstract, is neither our salvation nor our downfall. The truth is just complicated enough that it can be buried under a steamy mound of really poor leadership – one side that refuses to participate, the other that failed to make its case strongly enough to highlight the urgency and secure its victory.
Have a good buying season. Get what you can while the sales last. There may be serious deflation on the horizon as all of these things continue to fall in price, but it’s not the real problem.