The Transition from Consumer Economy to Conserver Economy

When I was growing up my Mom would tell us about her childhood in the Great Depression growing up on a farm, about driving to town with some chickens to sell and eggs to trade for an ice cream cone.  They did not feel deprived, but lived simply because they had to.  They were not hungry and all of their needs were cared for, but they were not shopping for sport or distraction.  They wasted little, with every resource used and reused.  When something broke, it was fixed.  If it had a hole, it was mended. That was just the way it was.   

For us kids the whole story sounded a little distant and irrelevant to our own lives.  We lived in the suburbs after all, in the land of fast food and shopping malls, ground zero of the consumer economy - what did chickens and farming have to do with us?   

My mom’s stories are sounding a lot more relevant these days.  Those chickens are coming home to roost.  After spiraling downward for several months the economy seems to have slid off a cliff lately.   Home values have plummeted, millions of people have lost their jobs, the stock market has lost an estimated $10 trillion in value, and we are left with a massive debt hangover.   It could be a long time before our old spending ways resume.  If ever.   

Many economists believe that when the economy finally bottoms out it won’t bounce back up, but enter a period of slow growth and a long slow recovery.  The trillions of dollars in lost asset values are not likely to recover quickly; those who are waiting for a quick return to old spending habits may be disappointed.  We are entering a new era in which consumerism is held in check by economic realities.  Americans have maintained for years a negative savings rate, spending more than they make, but you cannot keep this up forever.  Much of this spending was fueled by refinancing to withdraw money from homes that constantly escalated in values.   The dramatic declines in home values have taken this option off the table for most.  For the first time in years the savings rate for Americans has become positive again.  The consumer economy is being swiftly replaced by a new era in which people are spending less and saving more.  Rather than returning to the consumer economy of old, we may be entering a new era, the age of The Conserver Economy.   

The transition from consumer to conserver does not mean that opportunities for businesses are going away, but they are moving to new niches along with changing lives of individuals.  Finding the opportunities created by new trends and habits, businesses can join the conserver economy, helping people save more, waste less and take care of the long term.   

Despite the massive turmoil that we face, the Conserver Economy may also have good things going for it once we emerge.  By reducing waste and using resources more carefully, The Conserver Economy is greener in its impact on the environment.  It's also bigger than green trends have been in the past, and more closely connected to the concerns most Americans share like paying their bills, taking care of their kids and providing for their future.   

Next time I’ll talk about the trends and new opportunities for businesses large and small in the Conserver Economy. 

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2 Comments

  • Avery Q

    Many popular companies are now practicing sense-and-respond when it comes to running their business. Wal-Mart uses the Internet to allow their suppliers to access data about their daily sales. While doing this they are not only helping their suppliers, but they are also avoiding overstocking their stores; hence they only buy what they know they will sell. Companies such as Dell that mass customize their product for the consumer is also practicing sense–and-respond. While giving the consumer complete control over what they want in their product, Dell avoids wasting stock that cannot be sold to the consumer. Same with the employer-employee response to each other is relevant to the situation when it comes to satisfaction. The national unemployment rate has increased dramatically. Several states have hit double-digit unemployment rates, and a few more are set to join the ranks? Many people are hoping for an end sooner rather than later to unemployment and some debt relief.

  • Michael E. Douroux

    The theme of shifting to The Conserver Economy points us in the right direction.

    Please check out my blog entitled "Financial Conservation - The Necessity of Core Asset Conservation in The Changing Financial Environment" @
    http://coreassetconservation.b...