The recession has American families cleaning up their balance sheets. Households paid off nearly 1 percent of their debt in the third quarter of this fiscal year. For the year, household debt shrunk nearly 1 percent, the first such shrinkage recorded. Credit card balances are shrinking as well, though perhaps because credit card companies aren’t lending so easily anymore, and mortgages certainly aren’t growing. This household balance sheet repair is the first such showing in more than 50 years.
Despite January’s unexpected 1 percent rise in retail sales, Americans are paying off their debts. Reuters reported in November, “Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October.” American families increased their savings to 3.6 percent in December, according to Charles Schwab, up from almost zero a year before.
Consumption goes underground
While the uber-consumption of the last 18 years has ended, old habits are hard to break. While people are spending less because they have less, shoppers are still spending what they have.
During the last recession, it made sense (to some at least) to encourage shopping, traveling, and theater-going. “Get on board [airplanes],” former President George Bush said. “Do your business around the country. Fly and enjoy America’s great destination spots. Get down to Disney World in Florida. Take your families and enjoy life, the way we want it to be enjoyed.” (The approach apparently continued to have appeal in the Bush White House during the current recession, though Bush’s economics adviser admitted that “the president going out and telling people to go shop probably would not get the financial sector back in shape.”)
Still, Americans love to shop, and they are finding ways to do so — whether it means cutting back elsewhere or simply avoiding the conspicuous part of “conspicuous consumption.” After all, it is addictive (affecting 6 percent of Americans): “We have no money and considerable credit card debt,” one parent recently asked financial adviser Suze Orman. “Should we dip into our paltry emergency fund to pay for Christmas for the kids?”
Rather than dipping into emergency savings, some parents are cutting back their spending on themselves. Kristen Hunt didn’t want her daughter to think this Christmas was less bountiful than previous ones. “I want her to be able to look back and say, ‘Even though they were tough times, my mom was still able to give me stuff.’ “
(Years from now, however, children won’t be saying the same about their dads, who apparently are still spending on themselves. “In September and October,” reports The New York Times, “sales of women’s apparel fell precipitously compared with the same months the year before. They were down 18.2 percent in October, for instance, compared with a decrease of 8.3 percent for men’s apparel.”)
Others, who seem to be doing just fine financially, have restrained their shopping only for appearance’s sake. “Shopping is almost embarrassing and a little vulgar right now,” said Maggie Buckley, an editor at Allure magazine. Though they may feel a little ashamed by their need to buy, flocks of people have simply hidden their purchasing at “invitation-only shopping events springing up in hotel suites, at private showrooms or in the well-appointed parlors of their peers. Feeling the pangs of conscience, they are shopping on the down-low.”
One retail consultant explains, “People don’t want to be as public about shopping for luxury goods as they were in the past. It’s a feel-good way to buy, and this is a time for feel-good things.”
Investing in your best
Of course, this could simply be the death rattle of Americans’ consumption habit. Nouriel Roubini, a Columbia University economist who predicted the market crash and the following recession, now says, “Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak — with a growth rate of 1 percent to 1.5 percent — that it’s going to feel like a recession.”
Who knows, really, what the economic future holds? But of all the corrections needed — balancing the trade deficit, the budget deficit, consumer debt, and Wall Street excess — perhaps the biggest overdue bill is the idea that life isn’t about “stuff.”
It’s encouraging to see churches, many of whom are themselves struggling, stepping up to care for those outside the congregation. In fact, says Allen Walworth, president of Generis, a church fundraising consulting group, “Churches that give themselves away and are clear that’s what they’re about find a much more resilient and committed support pool.” On the other hand, he told the Los Angeles Times, “If a church just seems to be serving itself and protecting itself, it’s going to fall off pretty quickly when people are making their own hard choices .”
I remember being in Seoul in October 2005 for Christianity Today. Churches there were still recovering from the Asian financial crisis of 1997. A pastor told me that when the country’s currency collapsed, missionaries were forced to take a much-reduced level of support from their churches. Congregations were suffering from unemployment, so sending missionaries was doubly taxing — churches had more difficulty raising money, and that money didn’t go nearly as far in overseas currencies. Still, this pastor said, the church doubled its missionary support, and missionaries accepted the reduced converted currency.
Investors say they make their money in bear markets. When money is tight, you focus on your best investments, which pay off in the following bull market. Churches have the opportunity, and it seems they’re taking it up to do the same, focusing on what they do best — loving God and loving their neighbors.
Rob Moll is a Christianity Today editor at large.
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Related Elsewhere:
Our economic crisis special section has more news and commentary on the recession and related issues. See also our section on money & business.
CT’s earlier articles on consumerism include:
Buy to Be, Be to Buy | Sure, consumerism is bad. But we need to think about why. (Sept. 26, 2008)
Why the Devil takes VISA | A Christian response to the triumph of consumerism. (October 7, 1996)
Consuming Passions | One man’s testimony from the First Great Mammon Awakening. (July 9, 2001)
Christmas Unplugged | Why spending less and turning off TV should be part of the church’s mission to the world. (Dec. 9, 1996)
The Bobo Future | “Bourgeois bohemians” wield inordinate power over how we think about consumerism, morality—and faith itself. (July 25, 2000)
Trapped in the Cult of the Next Thing | If ever there was a cult that gave us stones when we asked for bread, this is it. (Sept. 6, 1999)
Keeping Up with the Amish | We evangelicals have made a too-easy peace with the inroads of consumer culture. (Oct. 4, 1999)
Shopping for the Real Me | Why nothing ever quite fits right. (Nov. 15, 1999)
