Consumer Debt and the Coming Recession

For those that pay attention to such things, the news is filled with extreme views about the current and future state of the economy. At the same moment in time, there are pundits arguing that most Americans are in abject economic misery, while others argue that life has never been better economically. One group is arguing that imminent economic doom is upon us, another tells us that things are only going up from here.

If most of us are honest, in the decade since the Great Recession, things have generally gotten better for most people. However, in many cases, people do not feel great about the economy and, at the same time, are setting themselves up for problems during the next recession.

The Inevitability of Recessions and Stock Declines

News reports predicting a coming economic recession or a significant stock market decline are correct. They have no idea when those things are going to come, but some sort of economic perturbation is pretty much inevitable.

One of the more interesting aspects of our attention economy is that when the next economic dip happens, its significance will be determined, in large part, by how people respond. For example, if people get skittish and sell during a stock market decline, that will make the stock market decline even worse. If people alter their consumer behaviors radically during a recession, that is likely to make the recession worse.

More significant than whether and when a recession is coming (it is and who knows) is how we are living day to day in anticipation of those events.

A Plea for Simple Living

There is no question that some people are struggling to meet basic necessities already. Due to a medical condition, loss of a job, a very low wage job, or bad debt choices earlier in life, many people are living paycheck to paycheck. If that is you, then feel free to check out. This post is written to the vast majority of us who are in the middle class and have some economic margin.

We once received a gift subscription to a magazine called Real Simple that amounts to an advertisement for a high-end consumeristic minimalist lifestyle. All the pictures were of perfect rooms with “simple” solutions to problems like magazine storage or whatever, but the solutions always cost hundreds of dollars. The result was an aesthetic simplicity, but that’s not how they got there. According to that style magazine, simplicity is a consumer good that is really expensive.

Simple living is less about what stuff you own and more about what activities and services you deem necessary. Simple living at its best is simply asking what aspects of life are necessary and eliminating those that don’t fit that definition. Another definition is that simple living is asking what we do that glorifies God and minimizing the extras.

When we stop asking risk vs. reward questions about our lifestyle choices, we put ourselves into the situation like the couple making $160,000 who were described as living in “modest oppression” because they “couldn’t afford” everything they wanted. Alyssa Quart’s description of the largely self-caused mental and emotional stresses of the middle class in her 2018 book, Squeezed, should serve as a warning to rational minds to make better choices.

As Christians in the American middle class, we really need to begin asking “why” questions if we are going to be effective stewards of our time, treasure, and opportunity. We have the means to get the gospel to the ends of the earth and instead we are spending our money to overflow landfills with useless plastic.

The simple life is about being focused on what adds gospel-value to the world and spending our money on that.

Avoiding Comparisons

Also in Squeezed, Quart writes, “While Americans overall may live better than medieval aristocrats could even dream of, that means nothing when oligarchs live next door, flaunting their luxurious homes.”

The funny thing about comparisons is that we tend to make them with those living above our means. Very few of us look at those who are legitimately struggling financially and go home thankful for our abundance. Instead, largely due to the mystique of television and movies in which everything is always perfect, we continually moan about the inadequacy of our resources.

There is a reason God gave us the 10th Commandment.

Did you have a nice vacation at home? Well, the other guy at work took his kids on a safari adventure. Now that vacation doesn’t look so good.

Does your daughter enjoy soccer? The neighbor down the street does, too, so they’ve invested thousands into clinics, travel teams, physical training, and other goods and services designed to get their child ahead. Suddenly the local rec league isn’t very compelling.

There isn’t necessarily anything wrong with a big vacation or pursuing excellence in sports, but those are often excesses that we try to have without making sacrifices to compensate.

The result is that many people who are making a whole lot of money are spending all of it and a little bit more.

Rising Debt Loads

One of more frightening statistics, in my opinion, is the rise in household debt to the levels prior to the 2008 recession.

The Great Recession was rough for a lot of people in large part because people were up to their ears in debt when the problem started. For a few years society seemed to learn a lesson, but now it appears that we have forgotten.

I’m not on the “no debt ever” train, for a variety of reasons. However, I do believe that we typically position ourselves better to survive economic downturns if we minimize debt and seek to eliminate it when times are good.

A lot of the debt right now is being driven by a perception that the stock market is going to keep going up and up. In the long run this is probably true, but there may be a point at which half of the money invested in the market will “disappear” just like it did in 2008 and 2009. That is never a great feeling, but it is a really terrible feeling when you know that your pay is likely to stagnate for a while, you may lose your job, and the company bonus you budgeted to pay for your vacation is unlikely to materialize. In other words, when you are up to your ears in debt, the clouds of economic doom look a lot more ominous.

Market expert is not a title I’d claim, but I remember the pain of debt-ridden people who had a high salary but large payments and weren’t seeing the economic growth they were counting on. One way to eliminate that pain is to avoid debt and eradicate it. To do that, we should consider the common causes of debt.

The Cause of Debt

The problem most middle-class Americans have is that they are spending too much on things that they enjoy too little and bring too little glory to God.

Instead of comparing ourselves to our neighbors, we ought to be regularly asking of every expenditure how this glorifies God. We will certainly get things wrong from time to time, but a gospel-focused consumer mind will likely resist the urge to overspend on things that really do little good for anyone.

Once we get above a certain financial level, most debt is driven by buying more car than we need, a nicer house than necessary, services that we only use occasionally, and products that offer little benefit in the long run. Evaluate your household spending for the last year with a critical eye and this will likely become self-evident.

This means that rather than being trapped in system that makes us do bad things, we are in a culture that encourages us to do dumb things and we usually don’t invest the will power to stop.

For most of us, our debt is a problem we have created by being unwilling to limit our consumer choices to that which glorifies God.

We are setting ourselves up for misery in the future with our choices today. Why not begin making simple, better choices that will leave us happier when the next downturn comes?

Squeezed - A Review

Even before the Great Recession and the slow climb out of it, many people expressed angst over their economic situation. As long as I can remember, and likely for all of human history, most people have expressed a sense that they can’t get ahead and that true financial stability is just out of reach. One thing that has shifted in the last few generations, however, is that people have argued that having a family is financially out of reach because of their current economic situation.

A desire for economic stability is leading many young people to delay marriage until their late 20s or early 30s. Then, once couples do get married, they often decide to wait to have children “until they can afford it.” The frequent, repeated news articles that tell people it costs a quarter million dollars or more to raise a child tend to entrench such arguments.

In her recent book, Squeezed: Why Our Families Can’t Afford America, Alissa Quart attempts to make these arguments in a book length format. She uses a journalistic-style, with supporting statistics interwoven with sympathetic anecdotes to make her case. The style itself is useful for convincing either (a) non-critical readers or (b) those already convinced. For those skeptical that centralized government solutions like UBI are the best solution for people’s feelings of dis-ease, the content of Quart’s book tends to make quite the opposite case that Quart intends.

There are certainly problems within our current economic system. Some of the cases that Quart outlines help to show what those problems are. For example, the injustice of our broken immigration system is evident in Chapter 5 of Squeezed and, in some ways, represents reality. However, what Quart actually shows is that consumerism is a miserable disease and that, in general, life would get a whole lot better for people if they turned off their televisions, got off the internet, and focused on living the life they can afford and loving the people around them.

A couple of the stories Quart highlights show the main problems with Americans that keep them from feeling they can afford a family are (a) a lack of permanent commitment in marriage and (b) covetousness.

The Damage of Impermanent Marriages

Quart begins the book with her own story. She and her husband were freelance writers living in a rent-controlled apartment in New York City when they had their first child. She describes the burden of paying $1,500 for the medical care she and her daughter incurred during delivery. Subsequently, they experienced “financial vertigo” because, “We first hired a nearly full-time sitter and most of my own take-home earnings as an editor went directly to her. Eventually, my earnings also flowed to my daughter’s cheerfully boho day care . . .” (pg. 3). The financial pressure they felt was primarily self-induced fear of “tumbling out of [their] class position.” (pg. 4) Contributing to this is the apparent sense that one must maintain one’s career even if it is financially unwise to do so.

Though it is not clearly defined, “middle class” in this book appears to be defined as living above your means without fear of financial repercussions. So, for Quart, it was essential for her to be able to fund a nanny so she could retain professional pride and independence from her husband, no matter what the financial burden or social cost to her offspring.

There are several cases throughout this volume that illustrate that fear of being left or getting divorced is what drives a lot of the financial pressure on her subjects. In other words, when a spouse fears that his or her marriage is impermanent and the spouse and their income may disappear at any moment, then there is terrific pressure to maintain a career at any and all costs. Quart does not identify this fear explicitly, but it is an obvious undercurrent throughout the book for those with eyes to see it. This is why the supposed 70% gender pay gap is so insidious in the eyes of many progressives.

If couples both valued and were committed to the permanence of marriage, much of the angst that Quart describes about finding suitable and cost-effective child care would diminish.

Covetousness

The other major problem illustrated by this book is not injustice, but covetousness. This is apparent in Quart’s story again, as she requires a personal baby sitter and then “boho daycare” for her child.

A more striking example of the problem of economic myopia and covetousness is documented in Chapter 2. Quart describes a case of “modest oppression” of a couple who made a combined household income of “around $160,000” as the department chair at a college (wife) and a part-time music composer, director of a music organization, and church organist (husband). Even given the high cost of living in New York City, it is hard to describe a couple making north of $150K as being oppressed in meaningful sense. Apparent in Quart’s description is that their unhappiness was largely due to the existence of people that appeared to be more comfortable and have fewer financial worries. Absent from Quart’s telling of their story is the idea that they might consider making different decisions (e.g., having the husband stay at home with the kids) that might alleviate the problem and result in better outcomes for everyone.

Similarly, in the same chapter Quart tells the story of an adjunct professor whose PhD was in avant garde poetry. She has a disabled son, conceived in a fling with a member of an indie rock group. There are multiple commendable aspects of the story: the adjunct was willing to work hard and she was committed first to not killing her child in utero and then to seeking proper care for him. The covetousness in this story is apparent because the adjunct believed herself to be entitled to the career of her choice––that is to be fully supported through adjuncting––because she had chosen to get an advanced degree in a particular field. There is some hope in this story because the chapter closes noting that Bolin had decided to pursue more regular employment.

Quart’s telling of these stories is intended to illicit the response that there is obvious injustice in the struggle of both of these families. However, it is clear to the casual reader that the greater portion of the financial distress in both these situations is a desire for something that is just out of reach: the idealized existence as a career advancing professional in the exact job one desires. The underlying assumption is that the world owes everyone their personally preferred lifestyle and existence. As long as people base their happiness on hanging on to social positions that are just above their income level or seeking the perfect working situation, their covetousness is destined to enhance their unhappiness.

Positives of the Book

The general premise of Squeezed is flawed, but there is value in the book.

First, there are multiple anecdotes that illustrate how significant the family and community are for financial stability. Though Quart does not draw the conclusion (instead calling for government intervention at nearly every level), it is apparent that stronger nuclear families and mediating institutions like the local church are essential to the flourishing of society. In many of the examples Quart provides, the reader can see how a strong connection to a local congregation that is functioning as the body of Christ could alleviate a great deal of stress.

Second, as noted above, the permanence of marriage tends to alleviate a lot of cost and stress. Both spouses need not pursue their careers full-bore if they trust each other to remain around. Additionally, the cost of living can be substantially reduced when both parents and children live together in the same house.

Third, in Chapter Ten, Quart highlights the work that television (or other versions of video entertainment) does in making people believe they are not well-off. Supposed “middle-class” families in SitComs are really incredibly rich. Everything on the set is in perfect condition, no one is really struggling for money, etc. The old puzzle about how the characters in Friends were able to live such apparently lavish lives in New York City is still a real phenomenon. Part of the work of the Church, then, should be to disabuse people of the fantasies of contemporary entertainment.

Conclusion

Ultimately, this is a popular-level book that will tend to convince the already convinced that a bigger government is needed to fix supposed injustices in the economy. What it really highlights is that much of our ongoing social misery is self-induced. If we readjust our expectations toward reality and focus on enjoying the relative wonders most of us experience on a daily basis, our satisfaction in life is bound to be enhanced.

Squeezed: Why Our Families Can't Afford America

By Alissa Quart

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NOTE: I received a gratis copy of this volume from the publisher with no expectation of a positive review.