Reflections on the New Normal

I heard an interview with consumer behavior psychologist Paco Underhill on the McNeil Lehrer News Hour Friday which got me thinking about what the next phase of American consumerism is going to look like. There is no shortage of consumer pundits who talk about this subject under the broader heading of the “new normal.” The idea of predicting changes and trends is a voyage in treacherous waters, only undertaken by the brave and the foolish, so here I go. You can decide which category I fall in.

Here is the problem in a nutshell. The old consumer paradigm was one of conspicuous, “I got mine, ain’t life grand” consumerism. The marketplace engine was fueled by the high octane belief that more was better and the sky was the limit. Across the board acquisition was a sign of vitality, even if debt reached staggering heights . Now comes the financial crisis of 2008-2009 and the buying frenzy has become a distant memory. Austerity is the current zeitgeist, and it is being adopted by both those who should have been a bit more austere for some time now and those who really don’t need to be, but don’t want to incur the wrath of others by showy shopping.

Fine, so far. But what comes next?  Underhill makes a somewhat dire prediction that “the engine of buying is going to shut down,” and that we are in for a “recalibration.” Maybe so. As he points out, 60% of disposable income in North America is in the hands of the 55+ consumer, and that they really don’t need to resupply themselves with anything more than socks and underwear. He makes a compelling case for a paradigm shift in our values and behavior.

Add to this the results of a recent Gallup Poll finding that  53% responding to a recent survey say they are spending less, and of that 53%, 32% say that this is a change that has leg;  that they intend to continue with their frugal ways. Hence, the “new normal.” But, headlines aside, this begs the question about the rest of the total sample, the 47% who say they aren’t spending less. (Indeed, 17% of their sample say they are spending more, not less. Makes you wonder what corner of the economy they are living in.) And what about those who say they are spending less, but that the change is only temporary. This group makes up the remaining 21% of the 53% who are saying that they are spending less. They are spending less now, but are itchy to return to the mall.

Here’s where I get a bit skeptical about the early predictions of a landmark shift in American consumer culture. Making these kinds of predictions is skating on thin ice. Remember how everything was going to be different after 911? Thought leaders called this a transformational event that would produce enduring shifts in our values and behavior. Except, it didn’t. “Post 911,” which became a shorthand for “everything you believed is no longer true” may have been a rallying point for some hideously doubtful political policies, but how much did things really change? Of course, there was little real initiative for substantive change from the feckless Bush administration, but even if they had called for something more substantial than a return to shopping, I wonder if it was really in the American DNA to realize any kind of larger shift.

So, what comes after the current crisis? Are we really looking at a “new normal?” Less spending and more saving? And, would this have taken place anyway, independent of the economic downturn because the Boomers are buying less in the seniority? And much of the younger generations rejected consumerism just because they reacted against the Boomer spending lust. Those people aren’t shifting their values. They were already there.

I hesitate before anticipating anything like a paradigm shift in spending. Here’s another way to look at it all. I believe that we will see some changes, but they will be more modest and subtle, although maybe no less meaningful, than those predicted by the pundits. We will return to the shopping arenas once the economy shows signs of recovery , and we will continue to use our purchasing power as a way to define ourselves. But, and this is a big but, the objects of that consumer energy will shift. Glitz and glamour objects of self-definition will likely give way to quieter expressions of who we are and what we value. There may be a “new normal,” but don’t expect it to be characterized by extreme austerity. Instead, look for you and your neighbors to be putting your dollars into items that express what really matters to you, from the inside out, not into items that are meant to impress others. No longer will it necessarily be the new boat, the flashy diamond, or the McMansion. Instead, we are likely to see a growth in things like the educational vacation, the sabbatical, and the voyage inward.

Of course, as I said above, only the brave and the foolish make these kind of predictions. Which camp are you in?