Consumer spending accounts for 70% of all economic activity in the U.S. So in order for the economy to fully recover, consumers need to be willing to part with their cash frequently and in large quantities. The problem is that homegrown American consumers are more inclined lately to save rather than spend. So why not import shoppers who are up to the task?
The economy always gets a boost when consumers spend more. No one stipulates that the consumers doing all the spending necessarily need to be American consumers, though.
At the moment, the frugal “new normal” has become the norm among American consumers. Americans are overwhelmingly pessimistic about the economy, according to a new TIME/Money magazine survey, and frugality has become the rule, with shoppers increasingly likely to shop in dollar stores, haggle over prices, spend time looking for discounts, and cut back on luxury spending.
(MORE: Survey: The Frugal ‘New Normal’ Has Become the Norm)
Consumer spending decreased 2% last year, following a 2.8% drop in 2009, and a turnaround isn’t expected anytime soon. As several economists told CNBC last week, spending by American consumers is forecast to remain stagnant for years. So if the American consumer can’t or won’t save the economy, who will?
Perhaps consumers from the likes of China, India, and Brazil. A Washington Post story discusses the efforts of U.S. political and business leaders to attract wealthy travelers from overseas, who are expected to open their wallets during epic shopping outings in the U.S. and “pick up the slack of penny-pinching Americans.”
While American consumers are spending less, spending by foreigners on American soil is sharply on the rise, up 13% last year to $87 billion. To woo even more foreign travelers (and even more of their money) to the U.S., officials are trying to speed up the visa process. Tourism bureaus are also trying to attract an international clientele by handing out shopping coupons and hosting events that appeal specifically to overseas visitors. Nevada recently hosted a Chinese beauty pageant, for instance.
(MORE: How the Newly Prudent Consumer Is Killing the Economy)
For many reasons, Americans aren’t game to spend freely at the moment, and the economy is suffering because of it. It must be noted that Americans aren’t doing their jobs as consumers because so many of them don’t have jobs, period.
Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.
