Over two years after the official end of the Lesser Depression, people still aren’t hiring. And here’s why.
Forget everything you hear on TV from partisans about regulatory uncertainty or taxes on “job creators”. The problem is that consumers aren’t consuming as much as they need to be to keep the economy growing.
Break it down a bit, though, and it turns out that the last four years have been OK for some industries — and killer for others.The below chart comes courtesy of The Economist. It paints an interesting picture of how the Lesser Depression changed consumer spending habits. One way to look at this is that in an economy as depressed as ours, people make durable necessities — cars, furniture, clothes — last longer. They skimp on frivs like eating out, and when they eat in, they buy cheaper stuff. Notice that real spending on food has dropped but, for instance, canned veggies are all the rage right now.
Spending on some items — see pets, toys, etc. — increased a bit, but less than you’d expect in good or even normal economic times.
And perhaps the best news is that people haven’t responded to all the bad news by indulging in unhealthy vices. Thanks in large part to a surge of cigarettes taxes, real spending on tobacco products is way down, as is spending on alcoholic beverages — though that could reflect a transition away from fancy beverages toward cheap American beers, and an equal level of drunkenness.