DALLAS – Uncle Sam wants you to spend, spend, spend.
Or rather, Uncle Sam needs you, the consumer, to pry open those wallets and patriotically nurse an ailing economy.
Vice President Dick Cheney said showing confidence in the economy – i.e., spending money – would be akin to sticking a thumb in the eye of terrorists. Even renowned financier Warren Buffett encouraged Americans to consider buying stock when Wall Street reopened after the Sept. 11 attacks to support the economy.
We must prove to terrorists that they cannot shut down the great American engine of prosperity and opportunity, said U.S. Chamber president Thomas Donohue.
Show your fidelity to America. Show Osama bin Laden he cant win, they say. Get thee to a mall.
At first blush, the call to shop does seem like an all-American solution. But can our penchant to consume conspicuously keep the terrorists from paralyzing the economy?
Maybe, says Daniel Howard, chairman of the department of marketing at Southern Methodist University. Reducing fear produces a stronger economy. And a strong, productive nation is optimal for any endeavor, including war.
The worry is valid. Consumer spending makes up two-thirds of the nations economy and almost single-handedly saved it from recession. Now the fear is that the shock of last months terrorist attacks could rein in Americans consumerist instincts. And that could turn whats widely believed to be a short recession into a deep, prolonged one.
Economists have been telling us this since the start of the slowdown. (Remember the somewhat tongue-in-cheek advice of Dallas Federal Reserve President Robert McTeer last spring? Everything would be OK if wed all just hold hands and buy SUVs.)
Now the pitch is wrapped in the flag – market patriotism, according to Robert Reich, the former secretary of labor under the Clinton administration.
What theyre saying is: go back to your normal lives, said Susanne Trimbath, a Milken Institute research economist. If your normal life includes purchasing new carpets or a new television set, dont not do that because of what happened.
But that got many Americans into trouble.
Fueled by fatter and fatter stock portfolios and rising home prices, Americans have been on a shopping binge for much of the last decade
People spent more than they earned. Buoyed by artificially high net worths, they stopped saving. But the market faltered and the bankruptcy lawyers are busy once again. The ranks of the unemployed are growing.
Certainly, the nearly 90,000 people being let go by 10 major U.S. airlines have scrapped any spending plans.
Instead of simply encouraging maxed-out shoppers to hit the mall, the federal government should help state and local governments shore up endangered programs and reduce taxes, said James Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.
Government needs to support the financial restructuring of households, he said. The airline bailout was a good idea to keep them flying, but it doesnt do anything directly for the relief of the people who lost their jobs or the larger problem of confidence.
Or the recent suggestion by a caller to a CNN talk show: Encourage credit-card companies to reduce rates on card balances, which havent moved much, if at all.
Government leaders could boost confidence far more effectively by putting more money in peoples pockets, said Reich in a recent newspaper editorial.
That sounded right to the executives at KMA Cos., a Dallas marketing firm for nonprofits.
A casual conversation about dropping consumer confidence, the terrorist attacks, and their own worries over how to raise funds in the current economic climate led to an unplanned run to the bank one recent Thursday afternoon, said Nancy Ruth, senior vice president of human resources.
Their regular Friday morning staff meeting began with an update of the difficult business climate. KMAs 86 employees expected to receive pink slips, she said. Instead, they got a crisp $100 bill.
The catch? The money must be spent. Not for savings, no bill-paying, no necessities. Go help the local economy.
Many of them are going out to eat, she said. Some are buying school clothes for their kids. Im spending mine at Victorias Secret.
Were taking President Bushs advice to heart, and it makes them feel better, too, she said.
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