More than five years and 50,000 miles ago, the car looked outstanding, bright and peppy with that heavenly smell that only a brand-new automobile can give off. Now the wear is showing, the paint is nicked, the pep has diminished and the smell is gone.
There comes a time to buy that just won`t be put off. With me, five years and 50,000 miles trigger a primeval instinct to start thinking again of that bittersweet experience called car-shopping, though I am sure the buying juices in others stir on different cycles.
In fact, 1986 was a big year for the car-and a big year for many other things, too. There was this false rosy glow about everything, a belief that debt would not be harmful, a feeling that deregulation would lower prices for banking and airlines, a notion that the economic expansion would never end, an undying faith in the goodness of corporate restructuring and a conviction that Teflon guarded the man in the White House.
Those perceptions have gone the way of my car, which is to say, heavily depreciated. But what has replaced them is equally false, though certainly not rosy. Although the Gulf War has ended, a heavy cynicism still hangs over an economy saddled with huge financial problems and weak business and job prospects in some key regions.
It is said that debt is so large that most Americans won`t return to the market for cars and homes in any significant numbers; that too many financial institutions are in trouble to provide a good, solid period of easy credit;
that the overseas markets for our goods and services are drying up; and that we, as a country, are seriously overextended, vulnerable to a great inflation or a great recession.
Yet on this first day of spring it is useful to remind: There comes a time to buy that just won`t be put off. Shakespeare said the British were a warlike people. We are a consuming people. We love bargains, and since two-thirds of our economy is consumer spending, this is a fortunate trait.
One reason for this recession was that people in the 1980s had bought themselves to near exhaustion. It was time to rest the wallet and the credit card, improve the personal balance sheet and live off the things we all bought. Now, as the economists say, nearly three years of substandard growth have brought enormous pent-up demand.
In short, there are a lot of cars like mine, and many much older. In fact, said Michael Drury, economist for the Boston Co. Economic Advisers, the average age of automobiles is something like eight years, obviously nearing time for replacement. And the 1991 model is clearly superior in many ways.
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Further, he said, automobile purchases as a percent of personal income fell to 4.8 percent in January, one of the lowest on record, all because of the economic downturn and the psychological effects of the war. This ratio had been in the 7 percent range before the recession struck. There is no place to go but up after January.
While real estate is still in the tank in many areas, it`s useful to remember that this is an underhoused country and that much of the overbuilding is in commercial buildings, many of them financed by go-go bankers. The pent- up demand for single-family homes is massive. Only price and interest rates hold it back.
Yet prices have fallen dramatically all over the country, and may be close to bottom. In fact, in the national capital region, where home prices have plunged more than 25 percent in recent years, there has been evidence of a housing pickup, especially as mortgage rates have dropped.
Many potential buyers of homes have been waiting for a time like this, when the price and the rates are right. While it may stretch their resources, some see it as their big chance to latch on to housing before it rises out of reach again. In addition, noted Drury, housing starts have fallen so low that they`re just above the rate required to replace housing retired each year.
Then there is the overly pessimistic view that Americans are just too laden with debt to buy again. Debt burdens are high, to be sure. But because of lower interest rates, debt payments amount to about 7 percent of income-about where they`ve been for five years.
But there is something more fundamental that will bring a new buying spirit. Americans have seen what aggressive holding back of purchases can do to the economy. Their dogged resistance to consumption in the past year has sparked one of the most aggressive layoff policies in U.S. history. Firms no longer wait patiently for a business pickup to slash their payrolls. They do it at the first sign of softness. Recessions now develop quickly after consumer sentiment turns negative.
In this sense, there is being written a new, implicit contract between American consumer and producer. If the U.S. economy is to remain strong in the 1990s, all must learn its tough provisions.
The producer must learn to respect the customer`s own financial fragility, and need for quality goods and services at the lowest possible price. The consumer must learn that wholesale buying boycotts will bring the swift retribution of unemployment to a member of the family.
There comes a time to buy that just can`t be put off. For the health of the economy, that time is now.