Broadcast October 11, 2001
Typically in times of war, the public is asked to hold back and forebear from purchasing so there's enough productive capacity left to meet the military's needs. If they don't do it voluntarily, government imposes rationing. Not this time. Even as we wage war on terrorism, our political and business leaders are asking Americans to go out to the malls and buy more. It's our patriot duty, they say. `We mustn't let the terrorists intimidate us from continuing our spending binge.'
The fact is we're almost certainly in a recession, which means there's plenty of spare productive capacity, enough both to wage a war and also produce all sorts of consumer goods. Indeed, the recession is likely to worsen unless we utilize more of that capacity. There's no way projected outlays for fighting the war on terrorism will come close. That's why consumers are hearing patriotic calls to spend more.
What has economists worried is that, particularly since September 11th, consumers are holding back. Retail sales are way down. Sales of large-ticket items, like appliances, cars and televisions, are in the cellar. Sales of vacation homes and cruises and holiday packages have almost dried up. Consumers don't want to spend right now, and that's perfectly understandable. People are deep in debt. Savings are at a 70-year low. And they're worried about keeping their jobs and concerned about the future, so naturally they're pulling in their belts.
But there's also a deeper reason. People just don't feel like splurging right now. It feels almost unseemly, given the national emergency we're in. In fact, the terrorist attack and worries about future attacks have caused a lot of people to consider reordering their priorities; to conclude that buying a lot of stuff and working all hours to afford it is less important than leading a full life, finding time to be with the people you love, slowing down and appreciating all the things in life that don't cost a lot of money.
This is something economists don't like to hear. If this war is causing Americans to reorder priorities and become a little less materialistic, the national economy could suffer.
But we don't live to support an economy. The economy exists to support us and the standard of living we choose. And if terrorism reminds us that what we can buy is less important than the lives we want to lead, that's OK with me and probably OK with you.