A fellow American expat remarked to me how much demand in the US market is based on the fragile premise of fleeting emotional desire while discussing the cash-only economy here in Uruguay.
For almost any consumer product purchase, it is clear that we buy primarily on emotional response in the US.
Houses: imagine the parties that we will have for our family and friends!
Cars: no more middle-aged-boring Dad once I am seen in my new hot car!
Macs: change my staid-PC-frumpy guy image to a tech-savvy-designer guy image!
For the past few years in the US, the biggest obstacle to purchasing anything—cash—has not really been an obstacle. With such a huge availability of credit, emotional desire trumped value and necessity when determining if a product was worth the price.
The steady stream of credit spending created a demand that was mostly based on hype, marketing and emotion which seems a weak base for an important economic principle.
Or perhaps emotional buying is the strongest pillar in a consumer economy?
{ 2 comments… read them below or add one }
Why is Uruguay all cash? How did they avoid the credit economy?
@Karen I’m not sure about Uruguay, but here in Japan cash > credit. You will find that most people might carry about $500+ on them everyday to use for most purchases. Big purchases are still bought with credit cards, but even then I think most people would not buy beyond their means.
One of the biggest difference between the US and other countries like Japan, and possibly Uruguay is probably how people shop. Here in Japan, the culture has always been buy only what you need when you need it. For that reason, Japanese shop for groceries almost everyday. Always getting the freshest ingredients. It’s not only helps you manage your cash flow, but you’re also not wasting things and eating healthier to boot.
Just my 2cents.