by Chuck Correll

Created on: March 22, 2009

Think about it. Sixty five to seventy percent of American Gross Domestic Product is a direct result of consumer spending. That means that at least 2/3 of every GDP dollar earned in this country is a direct result of what you spend on clothes, homes, cars, swimming pools, insurance, etc. American consumer spending represents 18% of the entire world's GDP!

Consumer spending in other industrialized nations as a percentage of GDP pales in comparison. We've seen a reversal of the days when other countries sought to purchase American products because they were the best in the world. Now, other countries manufacture the products and count on Americans to buy them. We now have seen the darkness at the end of the tunnel and have stopped buying all those foreign goods, as well as domestic ones. Hence the national and worldwide economic downturn.

In sync with our ridiculously high spending in the recent past, our savings percentage has been one of the lowest among industrialized nations. While savings have recently increased, it has averaged around .4% in the U.S. (that's 4/10ths of a percent). In Germany, it is close to 11%, Japan - 3.1%, U.K. - 2.9%, Italy - 6.8%, China - 24%, India - 28% (per Financial Services Roundtable analysis of OECD data).

We now know what an over-saturated American consumer that can't spend anymore looks like. If you want to see one, just look in the mirror, or at the very least, look at your neighbors. Automobile sales are down more than 50% and the last of our major manufacturing industries is now in jeopardy. Home sales and the sale of products we usually purchase with our "disposable income" are down dramatically as well.

The real question people should be asking today is not how quickly the economy will turn around, but will per-capita consumer spending ever return to previous levels? Will the American consumer ever spend 70% of GDP again?

My guess is that it will not. We're in the midst of a watershed event within the American economy. A 'perfect storm' of economic downturn, an overly debted population, destabilization of the middle class through the loss of our manufacturing base and the 'off-shoring' of white collar jobs have come together to strike at the very core of our economic engine.

Consumerism has worked its magic on the American people over several decades and we've been good soldiers by buying lots of needless stuff and, to paraphrase the late, great George Carlin, bought bigger houses in which to store all our stuff. The day of

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