The End Of American Consumerism

Over at Yahoo Tech-Ticker, retail industry analyst Howard Davidowitz sees a permanent change in the American lifestyle coming as a result of the economic crisis.

There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.

But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:

• An $8 trillion negative wealth effect from declining home values.
• A $10 trillion negative wealth effect from weakened capital markets.
• A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies."

"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."

Watch the whole interview, it's about six minutes and it'll scare the crap out of you. Davidowitz sees the American people going back to the early Reagan era of saving 8-9% of income just to survive. He sees massive unemployment from a decimated retail sector where stores like Wal-Mart are king, and specialty and high-end stores are gone almost completely.

Most of all, that crushing negative wealth effect we're looking at...$32 trillion in lost wealth gone for good...will lead to a permanent change in American lifestyle, where Americans have far less stuff, live within their means, save for a rainy day, and have a far lower standard of living. The days of a new car for a sweet sixteen present, six-figure yearly college tuition and million dollar McMansions in the exurbs are dead and gone, folks.

The world's going to be a very different place in just a short amount of time. A great many of us are not going to like the adjustment.