Rethinking the American consumer
economist.com
Rethinking the American consumer
1–10 of 13 posts
Re: Rethinking the American consumer
#2"[A]s Elizabeth Warren has argued, the idea that most Americans have been spending frivolously on consumer goods actually isn’t true. Instead, a hefty chunk of the increase in consumption in recent decades has been the result of higher housing prices"
I don't disagree, but past 1-2 decades have seen commoditization of housing, housing and related products started to resemble more and more like consumer goods in the U.S. than in any other country.
Re: Rethinking the American consumer
#3Housing is a necessity. A given house is not. I find this article hard to wrap my head around, as it really seems to be based on slipping in the idea that it is impossible to cut your housing costs and then going from there to "panic!", but that's not true. You can cut housing costs. You can control the costs of quite a few "necessities" nowadays; very, very few Americans are truly buying the absolute minimum "necessities". My wife and I have managed to cut quite a bit of "necessity" out over the past few years, and economized on several other "necessities".
Re: Rethinking the American consumer
#4Just because we spent as much yesterday as 20 years ago on consumer goods doesn't mean that our spending wasn't frivolous. Our essential costs skyrocketed. We should've cut back.
Re: Rethinking the American consumer
#5Housing is a necessity. A given house is not. I find this article hard to wrap my head around, as it really seems to be based on slipping in the idea that it is impossible to cut your housing costs and then going from there to "panic!", but that's not true. You can cut housing costs. You can control the costs of quite a few "necessities" nowadays; very, very few Americans are truly buying the absolute minimum "necess…
Before the financial and housing melt down, my wife was in law school and would occasionally file bankruptcy for folks pro bono. As one of the steps for filing, she reviewed all of their expenses. When looking over their monthly expenditures the individual would usually say things like "I need HBO and ESPN, it's a necessity. I need the data and texting plan and on my phone, it's a necessity. I need to lease the car from the bank and not drive a clunker or ride the bus, it's a necessity. I need to eat dinner out four times a week and not bring a sack lunch to work." Yes, these things are nice to have, but they are not necessities. In the end, she would play financial advisor to some of the poorest individuals in the city who spend their money on these "necessities."
Re: Rethinking the American consumer
#6Housing is a necessity. A given house is not. I find this article hard to wrap my head around, as it really seems to be based on slipping in the idea that it is impossible to cut your housing costs and then going from there to "panic!", but that's not true. You can cut housing costs. You can control the costs of quite a few "necessities" nowadays; very, very few Americans are truly buying the absolute minimum "necess…
If your mortgage is under water (i.e. the principal is more than the value of the house), you can't sell your house. And a large percentage of American mortgages are now under water.
Re: Rethinking the American consumer
#7The article doesn't bring up the fact that a majority of the people in developed countries have plenty of resources to afford their needs. A house is not a necessity. A car is not a necessity. And as one of the commenters pointed out, the rising cost of health care must be in part attributed to _better_ health care. It makes a difference, since many OTC drugs that we take for granted today would be considered life-savers in the 1930s.
Re: Rethinking the American consumer
#8Housing is a necessity. A given house is not. I find this article hard to wrap my head around, as it really seems to be based on slipping in the idea that it is impossible to cut your housing costs and then going from there to "panic!", but that's not true. You can cut housing costs. You can control the costs of quite a few "necessities" nowadays; very, very few Americans are truly buying the absolute minimum "necess…
If your mortgage is under water (i.e. the principal is more than the value of the house), you can't sell your house. And a large percentage of American mortgages are now under water.
You can't sell it without a writing a [certified] check for the difference or getting the bank to agree to a short sale. True that people in dire financial straits may not be able to do the former, but the latter is not out of the question.
Re: Rethinking the American consumer
#9Spending on health care is often frivolous. It's just that consumers have no better alternative than to trust their doctor when their doctor tells them that it's prudent to order an MRI, or that an expensive brand-name drug has advantages over a generic alternative.
Re: Rethinking the American consumer
#10Housing is a necessity. A given house is not. I find this article hard to wrap my head around, as it really seems to be based on slipping in the idea that it is impossible to cut your housing costs and then going from there to "panic!", but that's not true. You can cut housing costs. You can control the costs of quite a few "necessities" nowadays; very, very few Americans are truly buying the absolute minimum "necess…
If your mortgage is under water (i.e. the principal is more than the value of the house), you can't sell your house. And a large percentage of American mortgages are now under water.
Foreclosure is an option. If it's your only option, it sucks, but it is a way to cut costs. Is it expensive in itself, given the damage it does to your credit rating? Well, yes, but that doesn't mean it's not there, or sometimes the best choice. Should you not have ended up in the position where that was the best choice? Well, yes, but if that's where you are, that's where you are.
It's important to separate the ideal fact that you shouldn't be in that position from the practical fact that it is indeed an option.