Americans Buy a Lot of Junk, Junking the U.S.

This morning’s Wall Street Journal has a fascinating article entitled, “Americans Buy More Stuff They Don’t Need.”  Of course this comes as no shock to anyone.  But what was interesting about the story is the quantification of just how much junk your average U.S. citizen buys.

Specifically, the WSJ estimates that Americans Buy $1.2 trillion worth of junk each year.  This junk includes things like: alcohol, boats, candy, gambling and jewelry.  All together this stuff amounts to 11.2% of total consumer spending.  What’s more, the number is up from a level of 9.3% a decade ago and a level of 4.0% in 1959.  All of the data is adjusted for inflation.

Put another way, since 2001 the dollar amount of spending on junk is up 20.4% (= 11.2% ÷ 9.3% – 1), or$203.6 billion.  Since 1959 the dollar amount of spending on junk is up 180.0% (= 11.2% ÷ 4.0% – 1), or $771.4 billion.  These figures are adjusted for inflation.  So as a nation we just prefer to buy a bunch of crap that our forebears seemed to get along fine without.

To put it into perspective, $1.2 trillion works out to $3,909 per U.S. citizen (there are 307 million of us)!  Or put yet another way, the savings rate in the United States was negative for almost a decade and is now just around 2%, yet somehow we found it possible to spend 11.2% of our income on stuff we don’t need.  Folks in the U.S. like to whine about what we don’t have and that the country is falling down all around us.  Blah, blah, blah!

Those monies, all $1.2 trillion of them, could have been invested in alternative energy sources, an improvement in public education facilities, an improvement in roads, to pay off some of the gigantic amount of consumer debt, and so forth.  But instead it was spent on non-economic goods.  And by the way, that is $1.2 trillion of money each and every year.

For as long as I have been writing this blog I have talked about what real economic growth is, and it isn’t fake grass to line the bottom of an Easter basket.  Real economic growth is finding a way to get more out of the same set of resources or to get the same from a smaller set of resources.  Real economic growth has to do with efficiency gains and new valuable goods.

The scary thing is that the United States used to be a nation of savers and investors and now we are just indebted consumers.  Our fat is being fed by those nations on the planet that are savers and investors.  Those nations create goods that we want and they sell them to us.  But because we are a debtor nation, we buy those goods from those nations by issuing them an IOU – that is, a debt.  The alternative would be to scale back spending on crap we don’t need, save the money, and put those monies toward things that will improve our lives in the long-run before our junk has junked the U.S.

Jason