Tools and technologies are introduced every day that can help you do your job more efficiently.
Will Increased Savings Rates Hurt Home Building?
Editorial Director Paul Deffenbaugh suggests that American consumers who are now saving at a greater rate will be looking for very different housing when the home builder recovery comes.
Shopping for T-shirts recently, I paid the bank-busting price of $3 for each shirt. You can find similar bargains on other essentials at discount stores, and it occurred to me that if I were a particularly frugal person I could live in relative comfort. You need seven sets of clothing for a week. Each set of clothing should last three years or so. Shoes longer. Do this right and be willing to wear the same thing every day and you could reduce your expenditures to practically nothing.
Apply the same logic to food. Same meals on a regular basis will significantly reduce costs. In fact, I think I could drop my expenditures on daily necessities down to a pittance. (A "pittance," by definition, is a whole lot less than what I'm paying now.)
I'm not particularly frugal, nor am I a spendthrift. I like to save pennies but won't pass up a nice meal for a bit of porridge. In these tough economic times, frugality has taken on increased importance. People truly are trying to reduce — reduce their expenses, reduce their debt, reduce their waistlines. My friends who work in libraries are seeing booming business as people look for cheap entertainment.
Our economy is driven by consumer spending. The world would love to see the American consumer go shopping so that the economy would be revitalized. But I have to argue that there is something inherently wrong about that idea.
Our spending habits have outgrown our income habits. We have pushed ourselves into a bind, and the devotion Americans showed for spending heavily on real-estate over the middle years of this decade pushed that spending habit over the precipice.
It didn't start there, of course. The pattern of increased spending has trended upward since World War II. You can see it in increasing home sizes and fast food restaurants that introduced the super-size meal. They learned they could increase margins by making the portions larger.
|The trend to save
more and spend less will significantly
change the housing
market — if the
When I call this trend wrong, I don't mean to imply a moral condemnation. It is wrong because in the long-run it is not good for our economy. Perhaps a learned Nobel-laureate can dispute this claim with explanations of increased market size, etc., but no learned Nobel-laureate can dispute my mother, who said, "Everything in moderation." We have long ago surpassed the ideals of moderation. I don't think we need frugality, but we do need to readjust.
What's happening now is that readjustment. If the adjustment is permanent — if we continue this trend to saving more and spending less — we'll see Americans' ideals of homeownership become more moderate as well.