Americans are going through a fundamental shift in behaviour – they are moving from being the biggest spenders on the planet to becoming a nation of savers, with fundamental consequences for the economy.
After generations of living on tick, the country is turning to saving in response to the trauma of the credit crunch, according to CEOs at a San Francisco conference today. This will hit consumer electronics markets.
“The US as a consumer nation, has gone away,” John Daane, CEO of the programmable logic company Altera told today’s opening session of the Globalpress Summit Conference: “People have got used to living off two incomes. Apart from the income from their job, they’ve been living off the income from their houses as they borrow against their increasing value”
“But not any more”, added Daane, “house prices here have dropped 50 per cent.”
This means Americans will have to live off a single income, and the evidence is that they are saving even that. The consumer electronics market is one of the markets which are suffering in consequence.
Chris Rowen, CEO of Tensilica, agreed. “For generations Americans have been consumers now they’ve become savers”, Rowen told EW, “no one knows how long that will last, but it’s a fundamental change in peoples’ behaviour.”
Will human nature eventually take over when saving appears to become restrictive and boring? No one knows. But it could be the biggest shift in the habits of ordinary Americans for 50 years.