9:00am

Tue September 25, 2012
Planet Money

NYT Excerpt: Time For A Little Reckless Spending

Originally published on Tue September 25, 2012 9:04 am

In his New York Times Magazine column this week, Adam Davidson looks at why the future of the U.S. economy relies on millions of Americans who have a little disposable income. Here's an excerpt.

Imagine a couple in their 30s, living in the starter home that they bought eight years ago. Their kids have outgrown that tiny shared bedroom, and the den is crowded with toys. The couple are eager to buy a bigger place — they have paid down their debts and built up their savings — but they're not quite over the terror of the financial crisis and sluggish recovery. Even though they can afford it, they worry that now isn't the best time to splurge. What if one of them loses a job? What if the other doesn't get a raise for years? The agita still comes easily.

Though it doesn't always seem true, times actually have changed. During the worst of the recession, people were just plain broke. Their debts were at historic highs, and their savings were at record lows. That's no longer the case. American households have reduced much of that debt and built up some savings. They're just not spending it yet. So whereas the Federal Reserve was once tasked with performing life support on the financial sector, its new challenge is more subtle but nearly as complicated. It needs to convince consumers that they can trust the economy again, that now really is the time to jump back into the stock market or buy that bigger house.

Read the full column here.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

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