So much of US economic growth in recent years has been dependent upon consumer spending – estimated to be 70% of GDP. A major impact of this current recession has been the dramatic decline in consumer spending, driven by job losses, lack of credit, overleveraged home equity, and the reduced value of savings and other investments.
Despite the federal stimulus plan, largely focussed on capital projects and federal/state employment – economic expansion will only begin with consumers start spending (beyond the basic necessities) and get into the malls, auto dealerships, vacation resorts, etc.
In this Salon article, AP writer Jeannine Aversa interviewed a variety of business owners who interact everyday with regular Americans to get their take on what will signal recovery from this recession. An Applebee’s restaurant owner believes the recession will be over when customers start ordering “complete meals — appetizers, entrees and desserts — as well as drinks like iced tea or soda” again. Dayspas like Red Door are looking forward to their regular clients coming in for splurge treatments, like facials and massages, not just “maintenance” services such as hair coloring. Convenience store owners are watching for the return of the “lunch bucket guy”, often a construction worker who used to stop in for morning coffee and danish, a lunchtime sandwich, and an after work soda and chips.
It might not be the big ticket purchases (cars, home remodeling, vacations) that signal the return of consumer spending, but the suburban shopper picking up an extra outfit at the mall or office worker buying a round of drinks at their local watering hole.