The March 23 Newsweek had a very interesting article called, "Stop Saving Now!," by Daniel Gross. The article said that because of the recession, people are not spending any money so businesses don't get any customers so the economy gets worse. Gross said, "If everyone saves during a slack period, economic activity will decrease, thus making everyone poorer." People think they are doing the right thing by saving money but it would actually be better for the economy and the country as a whole if people weren't so thrifty.
"Hoarders must open their wallets and become consumers, and businesses must once again be willing to roll the dice. Nobody is advocating a return to the debt-fueled days of 4,000-square-foot second homes, $1,000 handbags and $6 specialty coffees. But in our economy, in which 70 percent of activity is derived from consumers, we do need our neighbors to spend." I know that money doesn't grow on trees but if we have a little extra laying around, spend it and remind yourself that you just helped everyone out by pumping money back into the economy.
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I believe spending money during a recession is a little more complicated. I understand what your trying to say, but during a recession most people don't have money laying around that they could casually spend.
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As long as there are rich people, money will be spent.
ReplyDeleteBesides, you can't stop the everyday consumer from purchasing their basic needs; Many consumers have "wants" as well, such as clothing or electronics.
Like storkafork said, the spending issue is a lot more complicated than they're making it out to be. But, yeah, I definitely agree that if people could somehow manage to spend a little more and inject some more money into the economy, the cycle would get up and running again much quicker. Luke makes a good point too, but even when it comes to necessities like food, consumers are getting very thrifty, my family included. We're buying more of the cheap, generic stuff and less of the brand-name foods. True, for most this could be because the recession caused a decrease in income (or got rid of their income altogether, if they lost their jobs), but for those who are just being thrifty just out of fear, perhaps a tiny bit more spending would help matters for everyone.
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