An Alternate Diagnosis for Bleak Consumers
An Alternate Diagnosis for Bleak Consumers
This piece originally appeared on the CSRHUB blog and the Huffington Post.
By Carol Pierson Holding
The U.S. consumer society is built on a slew of deeply imbedded cultural norms, from keeping up with the Joneses to the idea that shopping makes you feel better to President George W. Bush's exhortation after 9/11 that shopping is patriotic. So it is puzzling that, despite the fact that the U.S. has technically been out of a recession since June of 2009, consumer spending continues to lag.
This stall in consuming is blamed for the worsening economic lethargy, with consumer confidence considered a key indicator. That indicator is trending towards a possible double dip recession.
Ben Bernanke addressed this phenomenon in his speech last week in Minneapolis. Part of his explanation for why the recovery has stalled was that "Even taking into account the many financial pressures that Americans face, households seem exceptionally cautious." He's right: Based on historical models, people should be spending more. The New York Times' Binyamin Appelbaum posits a reason for consumer bleakness: "Americans collectively are suffering from what amounts to an economic version of post-traumatic stress disorder."
Yes, the economic collapse was a traumatic event. And it's true that post-traumatic stress disorder (PTSD) can take years to heal. Some never heal. Often the sufferer avoids anything that reminds him of the trauma. In this case, they might not want to spend money for fear of reliving the experience. Or they might numb themselves to ward off the high they used to get from shopping.
My own experience, living in New York when Lehman collapsed, supports the societal PTSD diagnosis. The day after the market fell over 900 points, I passed a workman unloading his truck and heard him call out to a friend "It's Armageddon" -- the same epitaph printed in huge font on the front page of New York's premier tabloid, The Daily News. I certainly experienced trauma, eventually leaving the city I could no longer afford and closing my business.
But that's not the reason that, years later, my fellow citizens and I are still not spending. Now, I believe we have to consider another mental state: Recovery from addiction.
My retreat from spending started long after the collapse happened. At first, as many Americans did, I continued to spend as I always had, using borrowed money. Whenever and however we decide to stop, we experience withdrawal symptoms: Anxiety, restlessness, irritability, insomnia, headaches, poor concentration, depression and social isolation. We might "slip" many times during this stage into the old, dangerous behavior, even after we have repudiated it.
An addict recovers finally by separating him or herself from the people, places and things that tempt. I believe our entire culture, now in recovery, is turning away from the lure of spending, substituting activities that are free and people who don't need to spend to enjoy life. Instead of going out to restaurants with clients, we are cooking at home and eating with family and friends. Malls are emptying and parks and campgrounds are filling up. Some unemployed may not be looking for work anymore because they have found a cheaper way to live that enables them to do more fulfilling work, despite the loss of pay.
Many Americans are souring on the economy, but there is definitely a silver lining.
Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Times, and many websites. Her articles on corporate social responsibility can be found at CSRHUB.com, a website that provides sustainability ratings data on 5,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.
CSRHUB is a corporate social responsibility (CSR) ratings tool that allows managers, researchers, consultants, academics and activists to track the CSR and sustainability performance of major companies. We aggregate data from more than 100 sources to provide our users with a comprehensive source of CSR information on nearly 5,000 publicly traded companies in 65 countries. CSRHUB is a B Corporation. Browse our ratings at www.csrhub.com.