Remember after 9/11 when George W. Bush said everyone should go shopping — “or the terrorists will win”?
But wasn’t the economy supposed to have receded anyways, without the terrorist attack? There was the super-hyped dotcom bubble and then Enron and the accounting blowup. Things needed to cool down.
Then the attack happened, the reactions of Bush and Greenspan et al impelled people to spend at precisely the moment people should have started to save, or cultivate real growth, or both and now…
According to the official numbers, economic growth in the U.S. has averaged 2.7% over the past 10 years. But by BusinessWeek‘s calculation, U.S. consumers have run up about $3 trillion in excess borrowing and spending over the same period—consumption that was not justified by income growth. Without that boost, which translated into new homes, cars, furniture, clothing, and the like, U.S. economic growth would have come in considerably lower.
And the world followed the U.S. lead.
Consumers got spun around and started mistaking the atmosphere of irrational exuberance of the late nineties as the benchmark of economic normality.
This is an old theory of mine — which I kind of hoped would be proven wrong.
Increasingly, it looks like the terrorists might have won after all, not by bringing down the economy directly, but by using the full weight of the U.S. consumer-driven economy against itself.
