Shop ’til you drop…
Americans are saving more… which means that they are spending less. Earlier this year average household debt was 134% of average household disposable income. If increased savings lowers that to, say, 100% (by way of comparison, the figure was in the 70% range in the Eighties), and the savings rate (which was essentially zero just before the bubble burst) returns to its historic (70-year) average of 9%, it will pull something like $4 trillion out of annual consumption… that’s to say it would reduce consumption by over 20%. And since consumption has been running over 70% of our roughly $13 Trillion GDP, that could make a dent in the trajectory of our consumer-driven society. A pretty big dent.*
How might it accrue? Well, there’s the impact on corporate earnings and employment (in an industrial/service base already at pretty serious overcapacity… and then there are the Dead Malls.
* for more on this phenomenon and what it might mean, this post in Jon Taplin’s blog is a good place to start… and for a peek at what could become of malls needy of a new purpose, see this post in The Infrastructuralist.
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As we cinch up our belts, we might think back to one of the driving forces that created the milieu in which malls were born and flourished: on this date in 1956 President Dwight D. Eisenhower signed the Federal-Aid Highway Act, landmark legislation that funded a 40,000-mile system of interstate roads that ultimately reached every American city with a population of more than 100,000. Today, almost 90% of the interstate system crosses rural areas, putting most citizens and businesses within driving distance of one another. Although Eisenhower’s rationale was martial (creating a road system on which convoys could travel more easily), the rewards were largely civilian. From the growth of trucking to the rise of suburbs, the interstate highway system re-shaped American landscapes and lives… and played a major role in creating the pre-conditions for the growth of the mall.
