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From ashes of the recession, will a new “American price” emerge?

 

For at least the past five years, the words “The China Price” have surfaced in conversations about the world economy, manufacturing and U.S. consumption.

That idea, as I interpret it, boils down to the world’s most-populous country having lower costs and a large labor pool to make production and research so affordable that it can easily attract international business.

Even though Chinese-made goods were sent on cargo ships across oceans, profits were still to be had mainly because of volume and production efficiencies – at least when the global economy was healthy.

Yes, a Chinese-style market economy has been different than what has happened in the United States.

BusinessWeek published an article in 2004 about this price shift, noting that items could be made for 30 to 50 percent less in China. Alexandra Harney wrote a book about the topic and blogs regularly about it.

Granted, that was five years ago.

But as this recession’s chokehold lessens in the United States, will a new “American price” start cropping up in this country?

By that, I mean less expensive prices – by noticeable amounts.

Will U.S. consumers – fatigued by the worst economic downturn in at least 50 years - demand more for less?

I understand that prices for gas and commodities, such as flour, can increase beyond a business owner’s control.

So, yes, some food products and other staples are more expensive. People will still buy these necessities.

But with a tight economy people watch their pocketbooks.

The need to survive kicks in - and the recent past can guide short-term spending behavior. 

This trend of sitting on the fence is likely to continue unless there’s a windfall of hiring at salaries that afford people more comfort to spend in bigger ways.

Conversely, companies need people to spend at relatively robust levels to support their workforce, cover expenses and hopefully ring up profits.   

Research and development require dollars and remain crucial for companies that must innovate to compete in the future.

And without the movement of money, companies suffering from poor sales can turn to layoffs – even though productivity numbers are inching up.

Experts are projecting that the recession is on the verge of ending. Technically, it might have actually stopped.

But they’re also forecasting that unemployment will continue at least in the near term.

Hiring typically picks up after recessions end – but experts also have tossed around the words “jobless recovery.”

Psychologically, it’s fair to presume that the 15 million people who are unemployed in the country will be cautious with what money they have left – until salaries roll in.

So, when will U.S. consumers be ready to enter the market again to spend at healthy levels to support companies?

Will the unemployed – and their stories – actually drive down prices in the coming year or so?

If this happens – and it’s a big hypothetical – how will it affect companies?

And those who do have jobs that pay well most likely realize that they can buy more for less these days.

There is some evidence to support this new lower price, as The Associated Press pointed out with some back-to-school shopping in Washington state.

Parents and students are buying goods, the wire service reported, but just at lower prices.

I don’t have the answers to all these questions. There might be a money flow in the economy or a key issue that I’ve overlooked.

Hopefully, there is a money flow to boost economic confidence. But it does seem logical to ask.

Certainly, we could keep an eye on the Consumer Price Index.

But sale signs are prevalent in stores these days.

This sign below – spotted at a popular retail store – gives strong hints to consumers that their dollar will buy more than before.

 

 

This shopping cart – seen at an Asian supermarket in Seattle – has a sign that basically says: “Take me. But just leave a dollar or so.”

The photograph at the top of this blog entry is from the same store, which attracts customers.

 

 

I should note that I’m one of those people in the country who is still searching for full-time employment.

In March, my newspaper job ended.

On some days, I’m optimistic that better times can only come from this experience.

On other days, I realize global competition is growing and U.S. economic data remain lower than desired.

For  years, I heard economists talk about how high-end research and development comprised this country’s global advantages – that manufacturing could be done overseas more cheaply and efficiently.

These days, I just hope that true economic expansion can happen soon.

UPDATE: It looks like the idea of lower prices also is hitting high fashion – or so says The New York Times.