Spend More Now, Think Later.

文/艾世傑Charles Estus

Since the economy has not gotten any better, it makes sense to keep talking about it. Economic woes don’t mean saving money in the US. According to current research by the Census Bureau and Federal Reserve it seems that Americans are spending $1.33 to every $1 earned. And an average household has $8,700 in credit card debt.

Wait a second… I thought you are supposed to spend less than you earn, not more! Americans have had a history of overspending since the mass introduction of charge cards. Diner’s Club in 1950, was one of the first to issue a singe card which could be used with multiple merchants. (Before that, each merchant issued a ‘credit card’ to each customer.) Since then, US credit card spending has grown out of control. Perhaps because of watching their own government function on a system of deficit spending, Americans have developed a habit of living a little too close to the edge of their financial abilities, and when something happens- such as a major expense- they are more than likely not prepared.

Why not use savings to cover these unexpected expenses, you ask? Unfortunately, Americans tend not to save their money. Recent investing has put billions of would-be-savings dollars into stocks, bonds and funds which, as you know, have lost unbelievable amounts of value. Therefore, banks rarely see cash deposited by their customers. Without enough cash-on-hand to cover an unexpected expense, Americans rely on their credit cards to get by. Meanwhile, just as in Taiwan, the consumer is prompted to spend to help the economy or be guilty of ‘contributing to the economic slowdown’.

So, spend to save the economy, but save enough for a rainy day!

Unfortunately for themselves, Americans can’t seem to stop buying things. Even since the recession started in December 2007, Americans have continued their spending in three major areas:
1) Personal care. It seems to make sense that even during hard times, people want to look and smell good! Shampoos, acne treatments, skin care gift sets, and grooming products showed a rise in sales from 11%-18% from Nov. 2007 to Nov. 2008. Another area that saw a jump was in the area of home remedies- natural medicines and over-the-counter cures for common health problems.
2) Escape. Perhaps one of the largest areas of expanding sales has been video games. Titles like Wii Fit and others saw a sales increase of 18% in the US in the third quarter of 2008. Smart phones are another product gaining sales over one year period from 13m in Nov 2007 to 24m in 2008, a rise of 53%. If the screen of the smart phone is too small, then how about a netbook computer? Sales in the third quarter of 2008 increased by 160%- however this figure might be due to the fact that more companies began offering mini laptops starting in Q2.
3) Keeping Fit. Americans are still trying to stay in shape during this gloomy period. Gym memberships are growing and expected to continue to increase by around 4% in 2009. Perhaps the fact that more people cannot afford health insurance and are avoiding going to the doctor has got them thinking about their health a bit more than usual.

There seems to be a common theme running through these areas a spending - escape from reality. According to Martin Lindstrom, the author of Buyology- Truth and Lies about What we Buy, “We want to dream ourselves away.” Perhaps if we dream the right dreams, by the time we wake up the nightmare will be over!
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