The consumer is getting mixed messages. On the one hand, we’re told to bring an end to our era of profligate spending, and that excessive use of “plastic” is now coming back to haunt us. And yet we’re also told that the economy needs consumers to spend, spend, spend in order to avoid a recession. High sales are necessarily presented in the media as good news. Low sales are always presented as bad news.
So why aren’t low sales/higher savings ever presented as good news? Perhaps because public economic commenters don’t have the language available to them to explain it. Any dummy on the street understands how shopping is good for the economy. You buy a product. You employ the teller and the manager at the store. It’s all good and simple.
The economic benefits of saving are no less robust, but they’re unseen. Savings may let our banks survive. Savings, unless they’re literally held under the mattress, are used by others for investment. Savings are why we have civilisation — buildings and other infrastructure that literally embody savings. Animals can’t save, except in some cases for the winter. We can, and it’s awesome.
For a fuller discussion, here’s a great video of Auburn econ prof Roger Garrison discussing the chapter on saving in Henry Hazlitt’s classic Economics In One Lesson. Put on your headphones, tune out the cable news yakkers and enjoy: