Holiday Mirth, Economic Myth
“Commerce and religion and patriotism are all part of what we have come to know as the holidays,” opines Leigh Eric Schmidt, a humanities professor at Washington University in St. Louis.
“Consumption during the holiday season has come to have a kind of patriotic quality in the United States,” he tells The New York Times.
And it didn’t start with George W. Bush — who, as it turns out, never did tell Americans after Sept. 11 and in the midst of the 2001 recession to “go shopping.” What he did say in December 2006, as it was obvious to everyone the housing market was rolling over, was this:
“As we work with Congress in the coming year to chart a new course in Iraq and strengthen our military to meet the challenges of the 21st century, we must also work together to achieve important goals for the American people here at home. This work begins with keeping our economy growing. …and I encourage you all to go shopping more.”
“Party on!” we ad post-epochally.
As with many unintended phenomena in America, the idea that we can consume our way to wealth rooted itself firmly during the administration of the 32nd president of the United States, Franklin Delano Roosevelt.
“FDR,” says Harvard historian Lizabeth Cohen, “and many who advised him, felt that the best route out of the Depression was putting money in consumers’ pockets so they could, in a sense, buy us out of the Great Depression.”
In 1939, he went so far as to move up Thanksgiving that year by one week — from Nov. 30 to Nov. 23 — thus extending what’s come to be known as the “holiday shopping season.”
Eighteen months later, he acknowledged the scheme failed. “The experiment had not worked,” The New York Times reported in May 1941. People bought no more in 1939 than in 1938, extra shopping days notwithstanding.
The myth that consumers can spend their way out of a recession goes along with a half-truth repeated every time the media reports retail sales figures.
“Consumer spending drives nearly 70% of economic activity,” said a CBS News report when the numbers came out last Friday.
Well yes… if you consider the formula for GDP to be a valid measure of “economic activity.” Which, for various nefarious reasons we explored yesterday, it’s not.
But far be it from us to bust economic myths this holiday season. Our friend John Papola makes the point far more entertaining… and helps puts today’s 5 in the holiday mood:
Program note: We’ve recently teamed up with John and his crew at Emergent Order for several video projects. Among them is our documentary project Risk!. They’re going to help us take Risk! over the finish line. We plan to begin airing episodes of the new film early in 2013… stay tuned!
The preceding article was excerpted from Agora Finacial’s 5 Min. Forecast. To read the entire episode, please feel free to do so here.