Wednesday, August 31, 2011

Stimulating the Economy

(Before I begin: am I the only one who wants to giggle everytime I hear the word "stimulate"? No? Just me? Okay.)

The other day I was listening to Marketplace on NPR, and I heard a snippet that caught my attention. They were discussing the growth of the economy and how this month there was more consumer spending than in the month before. First, I thought, "Duh, vacations and back to school shopping." The reporter went on to mention, in passing that, "Two-thirds of the US economy is based on spending."

Maybe this is obvious, but the US economy isn't something that I can completely wrap my head around. When I hear talk about improving the economy I know that includes jobs and the stock market and consumer confidence and all sorts of other catch phrases, but the fact of the matter is that the economy improves when we buy stuff.

Now, of course I think that people need to live and spend within their means, but I know I spend way less than I used to a few years ago. I got out of credit card debt, and then switched my focus to paying off my car. I'm a little looser with the purse strings now, but I still plan on saving most of my extra income, rather than spending it.

I think the recession caused a lot of people to make these types of changes. And overall I think it's good. Credit card debt causes countless problems, and it will save the government money in the future if more people are prepared for their senior years.

BUT. Is there any sense of obligation to spend? If I am lucky enough to have a job and have some disposable income, should I intentionally spend some of it to help stimulate the economy? I'm not talking running a bunch of debt here. But if I were going to do something for the greater good (in this case the US economy), should I buy some new DVDs or go get my nails done at a local salon? If those actions would result in more jobs for workers and more tax money going to a cash-strapped government, should I make some effort to do that?

I don't see myself changing my habits due to this idea, but I think it's an interesting philisophical question. (And maybe it will justify the pedicure I really want to get before school starts!)


  1. I don't feel the need to purposefully "stimulate" the economy.

    Since this weekend we will be able to pay off our last financial obligation, we have been a little looser with our wallets since we went so long with them tightened... but once our list is done we haven't been adding to it.

    My little spending won't actually do much if anything to simulate the economy... and I don't think people who don't want to spend should have to. Trust your instincts... this could get worse before it gets better... and you might need the extra cash stocked away.

  2. I definitely agree with SCG--I'm doubtful that my small amounts will have any sort of huge ripple effect, and I am focusing more on beefing up my own savings.

    Of course, after typing this I do have to wonder if it would make a larger ripple to have more people doing small-scale spending...Hmmm..

  3. I don't feel the need to purposely stimulate the economy also. I want to increase the amount in my savings so that if anything did potentially happen, then I am prepared.

  4. I actually do think that small amounts would make a difference in the overall economy is everyone was participating. If 2/3 is spending, that means it's each individual person's spending all adding up. I'm not advocating we all go wild...but perhaps intentional spending at businesses you want to support would make a difference?

  5. DVDs made in China won't help the US economy much, so I vote for the pedicure. Hmmm... I wonder if the nail polish was made in China? Probably...