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Writings by Randall

The Economics of Patience and “Need” vs. “Want”

If you’ve been watching the news at all, or just reading Twitter, there are three major stories happening in the United States--economically speaking. And I wonder if you put them all together if it’ll have something long-standing, long-term effects, on people’s choices.

The first story is the dramatic changes in the supply chain. Whether it’s furniture, cars, or about any other product, the likelihood that there’s been an enormous change in availability.  It is so easily noticed by just going to the grocery store. People are learning to have to come up with substitute options. And the costs for limited availability have increased dramatically.

The second is just driving by a car lot. What used to be full of cars is now empty. I’m not looking for a new car. I like the one that I have. But even if I was, you’re more likely to wait for a while. The prices are dramatically up, inventory is dramatically down, and what was normalized in choosing trims or extras is all but gone.

The third is the dramatic increase in cash savings. According to various studies, Americans have increased their overall short and long-term saving rates by three or four-fold. Some have a lot of cash on hand.

What do all three of these separate issues have in common and what will it mean for the future? I think the biggest thing I wonder is whether people are beginning to realize they don’t have to spend as much because they really don’t need as much. And the important word in that sentence is “need.”  Wanting something is different than needing it. Is there an awakening that comes from not being able to get what we want right away, realizing that the supply chain is not able to keep up in certain circumstances, but yet still with cash in our pockets, allow people the opportunity to consider their expenditures more deeply? And how does this affect our future purchasing power?

I would venture a guess that this will change some people’s decision making on want versus need and how quickly they purchase something in the future.

Randall Halletteconomy