We have a third of us that are immediate risk of being downwardly mobile, and that’s across the social classes.
The second third of us isn’t at immediate risk, but we know somebody who is. It may be a parent, a child, a friend, a neighbor. And for those people, they are taking pride in how little they’re spending for something.
And the third group is a group that’s paid off their mortgages. They basically have no real concerns. What they do know is that conspicuous consumption is now verboten.
—Economist Paco Underhill explaining the sharp downturn in consumer spending on the Lehrer News Hour
I found the later bit with David Wyss to echo my thoughts.
I had developed a theory about conspicuous consumption when I was assigned to work in the Morristown area of New Jersey many years ago. People in that area built houses deep in old farm lots that had wooded over. You couldn’t see the houses for the trees, but I figured them to be very well-appointed abodes with at least a few mansions thrown in. I thought that based on the cars I’d see on the roads – BMWs, Mercedes, Jaguars, and the like (this was before the Lexus brand became [i]de rigeuer[/i]). I always believed the residents of the area drove expensive cars not for any quality or technological reasons but because they could show them off in place of their expensive houses that no one could see. I suspect the habits of showing off affluence (even presumed) is hard to break even today. I’d be curious to know what financial decisions are being made in those hidden houses these days and the logic behind them.
Consumer spending is down for the simple reason that we were not as rich as we thought we were. Credit is not money is not wealth, as some wise poster on here said.