Are we headed for our own lost decade?
Over the last few weeks, the news has been filled with stories about consumers clamping down on discretionary spending. Increasingly, analysts are drawing connections between the changes in American spending habits and the change in Japanese culture during the famous "lost decade" of the 1990's and 2000's, a period of economic malaise that brought reduced wages, a depressed stock market, and a wave of miserly behavior that continues to undermine Japan's economy.
While Japan was once among the world's top consumers of luxury items, the lost decade wreaked havoc on its spending habits. Whiskey consumption, for example, is currently one fifth of what it was during its peak, and a recent survey demonstrated that the desire to own a car has halved in the last nine years.
Part of the reason for this lies in the fact that Japanese businesses, which once offered cradle-to-grave security, now rely on temp workers. In fact, 48% of workers under 25 are temps, a trend that has resulted in less security, lower wages, and fewer luxury purchases. However, even among older workers, the trend has long veered toward saving money; in many ways, Japan's citizenry continue to display the kind of shell-shocked thrift that most Americans associate with the Great Depression.
In the case of younger consumers, however, this repudiation of designer labels smacks of hipness, not self-restraint. Many perceive the move away from brand addiction as a move toward personal style. In an article in The Atlantic, for example, one executive noted that he "can afford to buy luxury brands but chooses not to. Brands like Armani [...] are 'for rich old dandies.'"
In America, it is clear that we are already working our way toward a thriftier future. However, as economists repeatedly tell us, a failure to be good consumers, while personally helpful, is socially dangerous. Basically, by saving money, we are improving our individual finances while undermining America's economy. The Japanese solution, namely a withdrawal from the market, has the potential to hobble our economy for years.
For a long time, I've thought that I was above the fray on this one. I've never been a good consumer; while I have a few favorite brands and definitely drool at the sight of fine workmanship, I get most of my designer clothing from discount outlets, thrift stores, or eBay. When I look at the full price on a tag, it's usually for comparison purposes to make me feel better about the red or yellow sticker price that I intend to actually pay.
However, with major department stores slashing prices and higher-income consumers rushing toward discount outlets, it's getting to the point where mainstream stores are almost as cheap as the filthy joints where I generally shop. Worse yet, I now have to elbow past ever-increasing numbers of yuppies at the local Marshall's, where the selection of Polo cashmere sweaters is getting thinner and the clearance aisles are getting more crowded. Even this wouldn't be all that bad, except for the fact that it's unsustainable. If Macy's and Bloomies can't support themselves, Marshalls and Super Mondo won't have a source for the designer brands that I've grown to adore!