The “new normal” — the idea that when income, credit and confidence return, Americans will not return to our free-spending ways — is an idea on the march, recruiting everyone from PIMCO CEO Mohamed El-Erian to Wal-Mart CEO Mike Duke. It’s spreading so fast it threatens to become the new orthodoxy.
I believe the argument is flawed. When Mike Duke says, “[P]eople are saving more, consuming less, and being more frugal and thoughtful in their purchases,” he is right in the short term, but wrong in the long term. When income, credit, and confidence return, consumers will party like its 1999.
To me this is one of the most important arguments going on in western society today. Will we return to our spending ways or will we back away from the consumer precipice and make more considered purchases?
What evidence is there that the ‘new normal’ is real and not an aberration from 60 years of consumerism?
I’d love to believe it but it seems thin to me.