America is in the early stages of a massive structural change, with people moving toward borrowing less, saving more and being far more careful with their spending. With the country both overbanked and overstored, the adjustments that the economy will have to go through will be wrenching.
Much of the adjustment, however, will occur outside of the U.S., where much of what American consumers purchase is made.
From 1998 to 2008, consumer spending rose to 70.5% of gross domestic product from 67.2%. If spending's share of GDP were to lurch back to its decade-ago level, it would fall by $470 billion.
The U.S. already has seen both imports and exports dry up. When February trade figures are released Thursday, economists expect they will show the trade deficit at $36 billion, equal to January's six-year low and well below the year earlier's $62 billion. The question is what will happen to the trade figures once the economy stabilizes.
While much of what the U.S. buys from other countries counts as consumer wares people might do without, a lot of what the U.S. exports includes stuff like machinery and technology goods that aren't as easy to forgo. As we measure economic performance by how much a country produces, places like China could be in for a far rockier ride than the U.S.
Justin Lahart
