rss feedU.S. News and World Report: Irrational consumers needed for economic recovery
I know: It’s hard to believe. But don’t prejudge.
Give hope a chance with this idea.
But people who exhibit spending behavior which is not considered to be rational by any means are one important pillar of the U.S. economic recovery following the Great Recession – the worst in at least 50 years.
How do I know this?
I read it online. You can, too.
Yahoo posted a quick blurb from U.S. News and World Report, which outlined potential dangers to an economic recovery under the title, “Let’s Hope These 4 Things Don’t Happen.”
In recent years, national magazines have drifted toward helpful, easy-to-digest, news-you-can-use articles. In this case, U.S. News noted that another housing downturn, U.S. debt crisis and stock market crash are experiences that ought to be avoided.
The fourth category under things that observers hope will not happen in the United States: “Consumers become rational.”
It’s important, as you can see, because the words are in bold.
Here’s the complete wording:
Given the painful transformation of the U.S. economy, Americans ought to be saving like crazy and buying nothing they don’t need. Some are, but it’s not clear yet if Americans as a whole will save more over the long term or go back to spending nearly everything they have. The savings rate has crept up to about 5 percent, but that’s still lower than the long-term average and far lower than you might expect after a collapse like the one we’ve endured. If savings continue to go up–a prudent move for most households–consumer spending will come down, leaving a hole in the growth of our gross domestic product, with little else to fill it. So hopes for a vigorous rebound rest on spendthrift consumers being as materialistic as ever. Now there’s a strong foundation for success.
Yes, it’s bouncy and punchy text, especially the last sentence.
But, well, where should I begin with this idea?
Let’s start with a basic analysis.
If rational consumers are one of four categories that are not wanted in the United States, then it becomes true that there are actual real and economic benefits to having irrational buyers as real-life actors pursuing daily consumption.
And we mean with real U.S. currency or the plastic that stand in its place.
Get it?
So, if we agree on that premise, let’s go to the definition of irrational.
Here’s the definition from dictionary.com and I’d argue that the part about irrational in terms of mathematics does not apply:
without the faculty of reason; deprived of reason….without or deprived of normal mental clarity or sound judgment….not in accordance with reason; utterly illogical: irrational arguments….not endowed with the faculty of reason: irrational animals.
So, if you lack the ability to reason, you’re asked to go out and buy things in ways that you never imagined (presuming that you could imagine since your ability to reason is impaired).
In other words, crazy people will help fuel economic growth, boost warehouse orders and pump the financial services sector as one pillar in leaving what the Great Recession has brought.
Non-crazy people will be home saving their dimes in glass jars and looking at the walls because they have no willingness to spend on anything remotely fun or big that would help the U.S. economy soar to the No. 1 spot.
If you don’t have the means to buy but have the inclination to like, then, by all means, go buy that expensive dark-wood dining room furniture set from places like Ethan Allen.
By the way, Ethan Allen just came to mind. The store does have a catchy advertising slogan, too:
YOU DESERVE A BEAUTIFUL HOME. NOW IS THE TIME.
And selling now at Ethan Allen is a stunning British Classics Table and Four Side Chairs for $1,999.
I should note that if you actually do have the money to buy quality, pricey furniture at Ethan Allen, by all means, please do so.
Ethan Allen executives, sales staff and delivery people will thank you. Economists will be grateful because they can count your sales somewhere in their statistics.
You’ll have some new furniture, too.
But based on the U.S. News definition, you might actually be considered a rational consumer because you have the financial means and security to buy such items.
So, I’m sorry. You would not be an irrational consumer – remember, they’re the ones in demand – who helps drive economic growth by spending money that you likely don’t have.
Nice try in winning one for the gipper.
But please try harder.
So as ironic as it might seem, the very group of people who helped get the United States into this economic morass – by buying things without questioning how they were going to pay for them in the long run – are the exact same group who are pivotal to pulling the country out of it.
Excellent!
A full circle.
And I am using the definition of ironic correctly here because a tragedy was involved.
So, if your mind is unclear about the money that you might or might not have, now and in the future, don’t despair.
You’re a wanted person. We need you.
Go out and shop, shop, shop.
Don’t be shy. Don’t be bashful. Be bold with your plastic. Be fearless with your bank accounts.
In the end, you will actually feel better coming home with all the new high- (or possibly low-) quality items that help make life easier, more luxurious, more modern, more comfortable and just more fun.
Tell your friends what you’ve bought because they’ll want to join the spending club, too.
Then, as you sit in your rented Swiss chalet, drinking a bottle of French wine that cost you hundreds of dollars, you can think three reassuring thoughts:
- I’m glad I flew first class.
- I’m glad I can read.
- Economic success has arrived!
Personally, I’ve always thought that healthy consumer spending is supported by salaries and wages that reward solid, honest work.
How wrong I was.
