A “Problem” I Haven’t Seen Mentioned
The worry is that even when the economy rebounds, many people will be hesitant to spend the way they once did. Now that they see what can happen they will be quite a bit more frugal and save for a rainy day. Some of that is good but not if it is taken too far.
But I think that this will in fact happen to even a greater degree than most people do. Because few people have taken into account something else that has been going on the last few years that may not have been noticed under ordinary circumstances. I am speaking of the fact that fairly cheap stuff has gotten much better.
Because of new technology and other reasons, inexpensive items now have quite good quality. Which means that it is harder to justify paying two or three times as much for the relatively small degree of improvement that you would get when buying the more expensive item. I mean there is no way that a Mercedes E class is “worth” three Toyota Camrys unless you are filthy rich. Ditto the Vizio flatscreen versus the Sony. And I am sure you could probably say similar things about vacuum cleaners and the like.
It is probable that during this economic crisis many semi wealthy people did serious shopping in Wal Mart etc. for the first time in their lives. And they were probably surprised that they didn’t have to give up as much quality as they thought. If I am right about that it could be a bigger problem for certain segments of the economy, even if there is a recovery, than many have anticipated. People may be reluctant to return to Macys or Cadillac not so much because they are scared but rather because they have learned not to be a sucker.