As an economy, we rely on consumer spending. In fact, personal consumption accounts for 70 percent of the economy. The more we buy, the more we manufacture, distribute, sell and recycle (all forms of economic growth). We judge “consumer confidence” as a measure of such spending—assuming that Americans will spend more if they believe their potential earning power is stable. We judge recessions and depressions based on increases and decreases in consumer spending, job growth and production growth.
But what is consumer spending started to slow despite high consumer confidence? What if consumers started buying less, hoarding less, and consuming less? What if the “sharing economy” and the “experience economy” start to take hold at a massive level?
During the Great Recession, we saw a collective tightening of belts and less conspicuous consumption. Many of us saw that bringing our lunch to work rather than eating out, buying regular unleaded gasoline (rather than “super”), and even lowering our heating thermastats did not have a significantly negative affect on our general happiness in life. Trading in that Hummer for a Prius was not all that bad.
And now with the rise of the sharing economy—everything from companies like Uber, Airbnb, Zipcar, Snapgoods Liguid, Chairish and Relayrides are creating businesses around the sharing or exchanging of goods, rather than the acquiring and hoarding of them. Instead of throwing out unwanted goods why not trade them to others? Instead of buying a new car, why not rent by the hour, or mile? Why do we need to own vacation houses that sit empty most of the year, or need a new sweater just because it’s the season’s latest?
It used to be that you hadn’t “made it” in life until you had bought a fancy house, a fancy car, and some fancy clothes. But is that still the case? Should it be?
Could our society move more and more to spending within our means, and reducing waste—recycling, reusing, and buying less?
Our economy relies on a constant upward trajectory of consumer spending. If our spending stays the same or decreases, our economy is seen as diseased and in decline—think unemployment, recession, yada yada.
Essentially, our economic health is based on whether we buy more and more new cars, and houses, and food, and clothes. We need to buy more airline tickets, theatre tickets, and box seats at the ballpark. We need to throw out that old TV, sofa, smartphone and computer on a regular basis in order to satisfy the insatiable demand of the U.S. economic engine.
We’ve spent the last 60+ years (the post WWII generations) hell-bent on feeding the industrial machine. Automobile companies created “model years” simply to make last year’s models obsolete, and increase new car purchases (an idea created by General Motors in the 1920’s). We’re told through marketing that we need “back-to-school” clothes and supplies, even though last year’s items still were in good repair. And, the Christmas buying season starts earlier and earlier every year—our economic health is based on how many worthless, unneeded gifts are bought and exchanged. Our economy is fed by infinite churn.
But what if we as a society started spending less, recycling and reusing more, and embracing a life of minimal consumer consumption? Many signs indicate that this might be a trend.
“Paperless statements” and “Online bill pay” have all but eliminated to use of stamps, checks, and envelopes to pay our bills (much to the chagrin of the USPS. Skype, and other electronic forms of communication has reduced the need to travel to far-off locations for in-person meetings (sorry travel industry).
And newer concepts like up-cycling, recycling, collective consumerism, and the sharing economy are beginning to catch on. Car sharing companies like Lyft or ZipCar are putting a dent in how we use (and need) cars to get around. eBay, Craigslist and the lot allow us to buy and sell used goods in a far easier way than through garage sales and thrift stores. And, countless companies are producing everything from eyewear to insulation and carpet padding using discarded/recycled materials. H&M, Gap, North Face, Levi Strauss and Apple all have run programs that reward customers for bringing back discarded goods for up-cycling and recycling.
The Internet is allowing us to access and build community around these new systems, and the Great Recession reminded us that we don’t require as much “new” goods as we thought we did.
In addition, the Great Recession taught many of us that living a simpler, less material (and costly) life—a life WITHIN our means, rather than one within our credit limit, may be very appealing.
The concept of living life with fewer but better things is an interesting concept—one that is being adopted by some of my more progressive friends. They far more carefully curate what they buy—considering durability, multi-uses and long-term return on investment in a much more serious way. Instead of buying a new set of this season’s sweaters every year, they buy 10-12 high-quality, classic designs that won’t have a tendency to go “out of style” before next season. These cautious consumers curate their material possessions instead of buying on impulse. It’s a concept that merges minimalism with pragmatism.
So what does all of this reduction, digitization and simplification mean? It means that consumer consumption may be out of style, and that we need to rethink what it means to have a “health economy.”
Perhaps business should be embracing the concepts of curated item shopping, and up-cycling and reusing. And it means that companies who rely on constant churn and a system of “obsoletism” should be finding new business models—or they too will suffer like the U.S. Post Office has by not adapting to the new world order.
Consumers are leading a transformative behavior shift—and businesses and our economists need to follow the leader.
Pile of misc items stored in an unorganized fashion in a room image courtesy of Shutterstock.