The Lost Decade – The Sequel

June 15, 2011

During the 1990s Japan entered what has come to be called the lost decade. After their housing bubble burst, the country faced years of stagnant economic growth and a decline in national confidence.  Unemployment rose, the value of the currency dropped and trade with the world diminished. In the meantime, China pushed Japan off the center stage of international economic growth, leaving Japan as Number 2 in Asia.

Sound familiar? Well there are many in the world of economics and finance who believe that we are in the early stages of our own lost decade. With the meltdown of 2008, the subsequent recession and the continued failure of the economy to rebound by adding significant growth and jobs, the view among experts is that we are becoming the 21st century version of Japan.

If this analysis is correct, the United States is not going to get out of this economic slowdown any time soon; rather we will have to adjust to years and years of anemic growth, high unemployment and growing middle class anxiety.

Usually a recession is followed by a period of vibrant economic growth and personal prosperity, but not this time around. The recession may be technically over, but there is no vibrant economic growth or personal prosperity; in fact there is growing consumer dismay alongside steady state unemployment.

What is also distressing about the lost decade analysis is that under such circumstance international political and dipomatic influence begins to wane as well. Other countries that are doing much better begin to play a larger role in the world arena. Watch out for China, and don’t forget about Brazil, Korea, and Russia.

Few Americans are willing to accept the lost decade viewpoint, as they think better times are around the corner and that we will innovate ourselves out of this downturn. But as economic numbers continue to be dismal, there will be a growing sense that maybe we are not just in a temporary funk, but rather stuck in a long, long period of stagnation. Not a reassuring vision of the future.

 

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Stuff and Things

July 27, 2009

The Great Recession has had a profound impact on America’s spending habits and perhaps more importantly the way the world’s greatest consumers think about what is an essential item that must be purchased and what is simply needless stuff or wasteful things.

There is plenty of evidence that not only is consumer spending flatlining, but that the once anemic savings rate is skyrocketing. Americans are now cutting coupons, joining food coops, bartering for goods over the internet and most importantly, just doing without. There is even a guy who has an enormously popular blog in which he challenges his readers to slim down to just 100 things, all in an effort to live frugally and end the era of conspicuous consumption.

I thought about the 100 things and wondered whether I could join this new movement of getting back to basics. And so one morning recently I walked though the house and took my pocket calculator out and started adding up the bare essentials and crossisng out the excess. Let me tell you right off the bat, I failed miserably at ending my lifestyle of acquisition.

I started with my underwear and sock drawer, which immediately put me up 20 things. Maybe I’m a clean freak, but I just couldn’t see myself wearing my unmentionables for more than one day and rely on one or two backups. This would require a regular visit to the washing machine, which I was never fond of anyway.

I did get my shirts, slacks, shoes and sweaters down from an excessive number, although that meant parting with some of my favorites. When I thought about it, some of my clothes had been sitting around ignored for years.  But despite my tough love approach, I found that I was up around 50 things, and I hadn’t gotten out of the bedroom.

The job got tougher as I perused all the gadgets I had acquired- computer, printer, Ipod, camcorder, camera, cell  phone, CDs, DVDs, an old radio, and my beloved flat screen tv. Saving all these electronic essentials put me well over the top , but there was still the kitchen, the garage, and the basement awaiting my calculator. In the kitchen I had to keep dishes, silverware, cups, glasses, blenders and my trusty can opener – after all I do consider myself civilized. In the garage no one was going to make me give up my snow blower and in the basement were all my tools, some of which I never use but keep anyway for some future unknown emergency.

By now I had completely failed the 100 thing test as I looked at my calculator and it registered well over 300, and this didn’t include my wine rack, my beer stash and my favorite bottle of Maker’s Mark bourbon. I guess the only conclusion to make is that I am addicted to stuff and would make a terrible minimalist.

The only consolation at the end of this consumer exercise is that I remain a proud American doing my best to keep the economy afloat by accumulating more stuff and more things.