Economists have taken as an article of faith that U.S. consumers drive global growth. Their reasoning: the U.S. is the world’s top market and consumer spending is two-thirds of U.S. GDP, ergo, the world rises or falls with the U.S. consumer.
Never mind that the U.S. has not been the top market for about four years already (the EU is). But there was enough truth to that axiom for it to have survived five decades. Consequently, the entire world had become geared to provide what the U.S. consumer wants at prices the U.S. consumer wants to pay.
Today we are seeing that, in fact, the U.S. consumer is falling by the wayside as the growth engine. Despite fragile consumer confidence shaken by a high unemployment rate, U.S. GDP growth has been solidly in the 3.7-4.2% range for the past six months. What’s driving it? Two things: Improved productivity and surging corporate profits.
The productivity gain comes partly from scared workers willing to work harder to keep their jobs. It also comes as the fruits of a quarter century of steady investments in computers and the skills needed to make use of them. In a pinch, a worker with a PC can do as much as two or three with pens and filing cabinets. The recession has forced companies to find ways to leverage technology to cut labor costs. Most of the jobs that were lost will never come back. Instead the unemployed will either learn computer skills or join service industries like restaurants and resorts catering to the smaller numbers of better-trained workers who are prospering.
The other, more important reason for surging profits is that the better U.S. companies are seeing the fruits of investments in operations overseas, primarily in Asia. That includes bellwether companies like Caterpillar, IBM, Intel, UPS, FedEx, McDonald’s and GM, among many others.
In March 2010 GM’s China sales jumped 68% over a year earlier to a monthly record of 230,048 vehicles for a 71% surge in Q1 sales to 623,546 units. By comparison its U.S. sales in March were 188,546 — 20% below China. Since 2006 Caterpillar—which makes equipment for construction, mines and infrastructure projects—quadrupled China sales while U.S. sales have been mostly flat. Even Hollywood studios have been looking beyond U.S. consumers for the bigger piece of their revenues since 2008 when overseas receipts of $9.9 bil. surpassed U.S. revenues of $9.59 bil.
Those trends are only going to accelerate as the growth of Asian economies continue to outpace the U.S. and Europe. At the current rates of growth, in about 13 years Asia’s middle class will equal those of the U.S. and Europe combined. Long before then, they will have become the focus of U.S. corporate growth strategies.
The decline of the U.S. consumer as the focal point of corporate business strategies will bring about several long-term changes. The big drawback will be that all Americans will have to spend a larger percentage of our incomes for clothing, cars, electronics and household goods. For Asian Americans, however, the upside should more than offset the downside.
As Asia’s booming middle-class takes center stage in the minds of corporate planners, a conscious push will begin to include more Asian faces in corporate executive suites and in Hollywood movies and TV shows. The social and psychological impact of that shift would be a marked rise in the value of Asian Americans as prospective employees, consultants, employers, business partners and even dates and mates. Rather than being deliberately passed over for our race, imagine being earmarked for special positive attention — the treatment Whites have traditionally enjoyed in typical professional and social situations. It may not be fashionable to say so, but we all know it’s as true today as it was a quarter century ago.
For most Asian Americans who have suffered subtle discrimination our entire lives, it isn’t hard to imagine the positive impact of such a global economic shift on our professional and personal lives. At a minimum this advantage would more than make up for the higher prices we will pay as American consumers. At long last we will experience what it’s like to be central instead of marginal.
