By Paul Kellett, AIA Director – Machine Vision
In its December 2009 edition of “Finance & Development”, the International Monetary Fund (IMF) ponders the impact that the changed behavior of US consumers will have on businesses.
As the IMF notes, US consumers have long been the engine of the world economy. Countries have imported goods en mass to the US where consumers have eagerly purchased them. This was especially true during favorable economic times when household net worth (supported largely by high property values) stimulated high rates of consumption (the so-called income effect). During this time, US saving rates were much lower than in other countries.
With the great recession, however, US consumer behavior has reversed itself. Consumers are spending far less and saving more. The IMF fears that this increased savings will not be enough to support sufficient capital formation to strengthen company balance sheets and thus to sustain growth. This could have adverse effects on the export of goods to the US (including machine vision products).
The other concern is that there appears to be no replacement in the world for the US consumer as the driver of world prosperity. The IMF does not believe China can fill the gap.
For more information, see “Rebuilding U.S. Wealth” on the IMF website, http://www.imf.org/external/pubs/ft/survey/so/2009/BOK121109A.htm