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Staying Well Ahead of the Joneses

As the economy booms and the media feed the desire to acquire, we are fast turning into a consumer nation.

May 07, 2000|MATTHEW EBNET | Times Staff Writer

For Jonathan and Terry Yee, teaching their two children to be responsible with money has been easy so far. When birthdays come, their kids don't request much, maybe a puzzle or a coloring book and pencils.

But sometimes when fancy catalogs drift into their Cypress home or when prime-time ads dance through their $20,000-plus "media room" or, worse, when a work friend shows off a new gadget, the Yees themselves have trouble saying no to the urge to buy.

"It's a poison," said Jonathan Yee, who runs a small computer chip company in Seal Beach. It's a poison that "comes from the vast multiple sources of media that we see as a family. I'm outnumbered by television, my co-workers. I'm outgunned. We're trying to be conscious [of spending], but we can't always win."

At one time, "status" meant "keeping up with the Joneses," those mythical next-door neighbors. Now, millions of American families are spending more on fancy things and buying them at a faster rate--taking their cues not only from the Joneses, but also from the ubiquitous influences of popular culture, music videos, upscale catalogs, movies and hip sitcoms at a time when "Who Wants to Be a Millionaire" is one of the most popular shows on TV.

America has become a sort of consumer nation. People, now more than ever, are defining themselves by their possessions and acquisitions, and Southern Californians are on the leading edge of this trend, said Santa Monica financial advisor Brent Kessel. "You are what you have."

The need to spend lavishly seems more powerful than ever, according to many consumers and those who study them. In part, they say, it's because upper-class lifestyles are dominating the cultural landscape as never before. Now, ordinary Americans are comparing themselves with celebrities in InStyle magazine and the cyber-millionaires they hear about on TV.

American consumption patterns--what we buy, how much and how briskly we buy it--have intensified dramatically over the last few years. In March, retail sales boomed to a seasonally adjusted record of $269.2 billion, up from $217.3 billion in February 1997 when the nation's economy hit the throttle after a prolonged recession, according to the U.S. Commerce department.

Much of the spree is being fueled by the nation's long-running economic expansion, a generally bullish stock market and the phenomenal growth of high-tech industry, which has created a new class of nouveau riche and fostered high-flying expectations of how we should live and things we should have.

In the early 1980s, Forbes magazine listed 13 billionaires among the United States' richest people; today it counts 268. Ten years ago, there were 1.3 million millionaires; today, 5 million. Some experts estimate there are 7.1 million households with an income of at least $1 million--and forecasters say that number could approach 20 million over the next decade.

Americans also are spending more each month than they save--a reflection, experts say, of frenzied consumption. Since September 1998, the monthly savings rate has hovered near zero. Commerce Department figures show the latest personal savings rate was just 0.4% in March, up from 0.2% in February, the all-time low. By comparison, the savings rate ranged between 5% and 10% through most of the last half of the 20th century. Even in the 1970s, during tough economic times and high inflation, the savings rate was about 9%.

Aspiring to the Good Life

In a Los Angeles Times poll conducted last fall, an overwhelming majority of suburban Southern California residents--as much as 91% in some areas--explained their spending habits by saying they weren't trying to keep up with the Joneses but did stretch their financial resources to live in a particular community and to have the latest conveniences.

Still others, including many of the Southland's blue-collar workers and recent immigrants--who need most of what they earn for basic needs--may spend their whole lives longing for such a problem.

For people like the Yees, who make a comfortable living, the urge to spend is manageable, if lamentable. But for many, it can end in a downward financial spiral.

Consider Ann Fort, who found herself close to bankruptcy, $20,000 in debt. The Lake Forest woman had been traveling spontaneously, dining out without considering the limits of her bank account and trying to match the lifestyles of richer folk.

"I see all these people, and I don't know how they do it," she said, now more than two years into a scaled-down lifestyle and solvency. "Maybe they are leasing their cars. I don't know. Maybe they're all just rich and living a perfect life. That's certainly how it looks, doesn't it?"

Juliet B. Schor, author of "The Overspent American: Upscaling, Downshifting and the New Consumer" (HarperCollins, 1999) and a professor of economics at Harvard University, believes television is at the root of overspending.

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