Re:The End of Retirement (2014)
by bumby on Thursday May 20, 2021 @11:43AM
(#27222635)
A year and a half ago, I would have believed you but I think the data from the stimulus payments in the U.S. shows that a substantial portion of that money went to pay down debt and into savings. I think credit card debt went down something like 14.5% over 2020. Maybe some of this is attributable to the fact there was less availability for experiential spending, but people certainly had availability for buying consumer goods online. And some are expecting the debt to incur faster once the pandemic is fully in the rearview, but it's enough for me to question the strength of my previous conviction that giving people money automatically means they spend it on consumerism.
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The jury is still out. Traveling and going out is a massive discretionary spending article, even just from my own experience. There IS a glut of cash on-hand right now, hence all the degenerate gambling in the stock market and crypto, but we will find out how permanent this is, soon enough.
I agree, it remains to be seen how it will play out. But I wonder if the HN lifestyle biases us to the view of how much of an impact it will have. A cursory search showed travel and restaurants are 2.8% and 4.4% of US GDP respectively but I bet if you ask most HN commenters, they'd assume it's much higher.
I have a slightly different view on the stock market piece. I think there's a cohort who are young enough to think the market returns over the last year are the norm, which led them to believe "the market always goes up" and was an easy way to make money. This group tends towards the growth stocks but it seems like they may now be more skittish once they got a taste of a severe market downside
> There IS a glut of cash on-hand right now,
For some people. Others still have very little cash.
https://www.bloomberg.com/news/articles/2020-12-10/how-a-k-s...
But the stimulus payments were 1 off vs increases in annual salary, which makes it a lot harder to use it towards lifestyle inflation.
Is your perspective that a windfall is less likely to lead to discretionary spending resulting in a paycheck-to-paycheck lifestyle than a salary increase?
I may be wrong, but my previous intuition was that if people have a recurring increased income stream they'd be more likely to save and invest than if it was a one-off.