In a Washington Post article earlier this year, Michael Fletcher pointed to some disturbing facts about the direction of the middle class economy. At the heart of the matter is a curious reversal: although the typical American family now earns less than it did seven years ago, its rate of consumption has increased significantly.
Median family income in the United States peaked in the year 2000; since then, it has dropped by roughly $1,000. Yet though household items once considered desirable luxuries have gone down in price—dishwashers, for example, or family cameras or air conditioners—middle-class Americans are spending more for them than ever before. We buy more, we save less, and we discard much more. Consider apparel. In 1991, the average American bought 33.7 pieces of clothing; by 2002, this number had increased to 48 items per person, up nearly 50%. Or consider computers. In 2005, Americans threw out more than 63 million computers, the majority of them perfectly functional, in exchange for newer models. Small wonder that for the first time since 1933, when we were in the belly of the great depression, 2005 saw Americans in a state of negative savings: spending every penny they earned and somewhat more!
What does it all mean? That our sense of entitlement to the affluent life is in fact leading us away from the good life, where balance, moderation, and an innate sense of how much is enough hold sway, where we’re buffered by savings against emergencies. We need to remind ourselves of that central, much-neglected truth of consumer cultures: you can never get enough of what you don’t really need.
Carrie Rattle is a Principal at BehavioralCents.com, a website for women focused on mind and money behaviors. She has worked in the financial services industry for 20+ years and hopes to inspire women to better prepare themselves for financial independence.