It’s Consumer Spending, Stupid?

There is a good op/ed piece in the NY Times today that argues increased consumer spending is the way to get America out of its economic funk.

I want to look at this from the perspective of New Brunswick and the Maritime Provinces.  It is true that consumer spending drives the economy.  There is no question on this but increasing consumer spending comes from basically two sources: 1) getting existing consumers to spend more (save less) or 2) increasing overall income -a large  portion of which will automatically go to consumer spending.

Most economic development is focused on point 2) – particularly in a place like New Brunswick which already has one of the lowest savings rates around – and as I said recently very low discretionary income compared to the national average.  In richer jurisdictions trying to get Boomers to part with more of their accumulated wealth may work but in New Brunswick, I would argue, we need to work on increasing wealth and that will lead to more consumer spending and that will generate jobs and taxes for government.