16 September 2009
Survey: U.S. Consumer Cannot Be Replaced
Questions remain about consumer behavior
David Cross
President, Market Outlook
September 8
In the medium-term, there really are not any other economic sectors or regions with enough potential lift to stimulate a strong, self-sustaining global recovery.
We always hear this chatter during recessions about American consumers permanently scaling back their so-called profligate spending behavior, only to see a resumption of brisk demand from pent-up needs and wants once the job market starts growing again. After this record recession, however, more adverse credit conditions, and the longer-term damage to household wealth from the housing bust and setbacks to retirement portfolios do point to a higher household saving rate longer-term, but nowhere close to the rates prevailing in other countries.
Deeply entrenched (and unique) demographic, social, and policy drivers will ultimately put U.S. consumer spending back into a leading (but slightly diminished role) in shaping global growth. Major unknown: the degree to which large demographic groups will alter their spending behavior, post-recession. Will boomers move aggressively to rebuild retirement savings? Has the economic crisis permanently affected attitudes and buying power of entry level (Generation-Y) consumers?
