LOS ANGELES, March 22 (UPI) -- Economists say the era of the U.S. economy being consumer-driven may be over since many households are debt-strapped and unable to borrow against their homes.
The Boston Globe reported Sunday that to make up the difference the federal government is helping to prop up the economy by increasing spending.
Experts say the shift away from a consumer-driven economy will mean changes in the way Americans live and do business. They say Americans will need to borrow and consume less, while saving, producing and exporting more than they do now.
"We are going to need fewer malls and more factories," said Edward Leamer, director of the UCLA Anderson Forecast, "and it's going to be a long adjustment."
The U.S. Commerce Department says consumer spending is at about 70.5 percent of the nation's economic activity, down from a peak of about 71 percent in mid-2008 but up from as little as 62 percent in the early 1980s, the newspaper noted.
Experts say if consumer spending falls to 65 percent of economic activity, which is the postwar average, it would be equivalent to a loss of nearly $1 trillion in economic activity.
"Instead of U.S. consumers leading the way, they're going to be just holding their own," said Mark Zandi, chief economist at Moody's Economy.com. "The world is going to feel a lot different over the next 10 years than it did in the past 25."
