Sales are up this holiday season, but what if you didn’t shop at all for a year?
So, how is your holiday shopping going? I’m not quite done yet and I know I need to get on the ball and get finished so that I’m not stuck with rush shipping fees. Now that my all-important birthday is out of the way, I can get about the business of attending to the rest of the world.
Shopping for this holiday season is up a bit, with consumers spending over $2 billion black Friday weekend. A fair portion of that is online, as more and more people either don’t have the time or just don’t want to be bothered with going to the store. The amount we are spending, per person, however, is up. Generally speaking, that is a good thing. Our level of holiday spending is typically an indicator of how positive we’re feeling about the coming year. Obviously, some of you are tremendously more positive than I am.
What would happen, though, if none of us bought anything for an entire year? I know, it could never happen. We need stuff. The economy needs us to need stuff. However, I came across an article this week from a woman who just finished a year without shopping. She actually did it. The article got me thinking about the ramifications of such a thing becoming even moderately widespread. We could save money, but would that sink the economy?
What it takes to not shop
The article in question, My year of no spending is over – here’s how I got through it, was published on the Money Blog of The Guardian this past week. The author, Michelle McGagh, details some of the challenges of a decision she made to change her personal shopping habits. She writes:
I was spending without thinking, lured in by advertising and the promise that I could spend my way to happiness. I was stuck in a cycle of consumerism – earning money to buy stuff I didn’t really need, which wasn’t making me happy.
The problem she saw in herself is likely one with which a lot of us can identify, especially this time of year. We shop without thinking. We know we need X number of gifts for whichever holiday(s) you observe, but then we go beyond that, filling our baskets, and our credit cards, with things simply because, “ooh, that’s a really good price.” Do we actually need all the stuff we buy? Absolutely not. The question is, can we actually survive not buying it?
Ms. McGagh’s caveat is that bills and pre-arranged obligations came first. When it was necessary to pay her share on a roofing job between her and her neighbor, she did. Living in London, she also had to buy her food, not grow it. It’s not that she didn’t spend any money at all. She took care of her basic needs. What she didn’t do was shop and shopping is different than buying. We buy what we need. We shop for what we want.
Along the way, Ms. McGagh found that her attitude toward spending changed. She was not as affected by sales ads and commercials. She wasn’t drawn in by artificial discounts. She also made some sacrifices, such as biking instead of taking the bus, not hanging out at bars with friends, and choosing vacation options that many of us might find boring. In the end, though, she was able to pay down her mortgage significantly and save a great deal of money in the process. Her exercise in being frugal sounds successful. Still, that doesn’t mean we should all join her.
Your role in the economy
When we talk about personal finances, the emphasis is almost always on the personal. We look at out spending in relation to how we are affected directly. However, there is another element here that deserves some consideration before we all try to start a new movement of frugality or anything. What we do, whether buying or shopping, has an effect outside of ourselves. While helping our own finances, we can inadvertently do harm to others.
There is this thing called the Gross Domestic Product (GDP). This is, effectually, how much money the country spends in the course of a year. U.S. GDP was $18.657 trillion in the Third Quarter 2016. We’ve stayed pretty much on that level of spending the entire year. What’s important to our country’s economy is for that number to grow.
You, dear reader, participate in the GDP every time you make a purchase. This is known as the GDP per capita. If the simple GDP was $18.657 trillion and we divide that by the approximated population of the United States, we have a GDP per capita somewhere around $50,424.32. That’s a lot of buying for one person.
Obviously, a lot of us don’t spend $50K. This is an average. Roughly half the population spends more, while the other half spends less. Still, that number represents our level of participation in the nation’s economy. While a single person’s $50K may not seem like much, the aggregation of many people pulling back on their spending would have a considerable impact. You may buy only one “big ticket” (over $1000) item this year, but if a million people, less than one percent, were to skip that big ticket item, our economy would experience a moderate recession. If five million people reduce their personal spending by more than 50%, we’re looking at a full-blown depression. The economy is dependent not merely on you buying, but buying more than you earn. That’s why you see so many commercials pushing credit cards.
Striking the right balance
There is a balance, I think, between being as frugal as Ms. McGagh’s experiment and being an economically responsible citizen. We can grow the GDP without breaking the bank, which has been our typical approach.
First, we need to re-think how we shop and what we buy. Instead of giving in to the temptation of fast fashion and buying clothes multiple times a year, one can focus on spending a little more per piece for quality goods that don’t have to be replaced as often. You’re still spending, but you ultimately save money by not running to H&M every other week because that blouse or pants you bought six months ago is already falling apart.
Second, we need to consider where we shop. Buying local, especially at single-owner shops and boutiques, has a greater impact on the economy than shopping at big box stores. With large retailers, much of what you spend goes to international suppliers and does not have as much impact on the US GDP. However, when you buy locally made goods and services from entrepreneurs who live in your town, the vast majority of the money stays right here. You don’t have to spend as much to boost the GDP.
Third, be a little more self-sufficient, especially when it comes to food. Despite the fact that we raise immense amounts of food on farms across the United States, roughly 20 percent of what you see in the store, especially in terms of fresh fruits and vegetables, is grown elsewhere. That adds up to about 390 pounds per capita that’s not having a full impact on the domestic GDP. Yet, if stores are not providing local produce, what options do you have? For many Americans, a small garden in their yard could have a tremendous impact, saving you both money and, in the strange way that numbers sometimes work, boosting the economy. It might take a little innovation for some, but if even 20 percent of the population started growing 20 percent of the vegetables they consume, the impact would be considerable.
So, could you go a whole year without shopping? I know that might be asking a bit much, but given the uncertainties of the next few years, a bit of frugality is probably not a bad thing at all.