Hyperbole and the US savings rate
This press release from Alix Partners just arrived in my inbox; it’s plugging a survey that the company has kindasorta released. The survey “is proprietary“, they say, but that doesn’t stop them from scaremongering up a storm:
While American industry is struggling to get through what could become the worst recession since the Great Depression, Americans say that even after the recession ends, their spending will return to just 86% of pre-recession levels, which equates to an approximate 10% drop, or more than $1 trillion annually, in GDP. They also say this new, lower level of spending is structural and could last for nearly a decade after the recession ends. The findings are based on an in-depth economic survey of more than 5,000 Americans released today by AlixPartners LLP, the global business-advisory firm.
If you read this very carefully, it’s not actually saying that there’s a snowball’s chance in hell of consumer spending or US GDP dropping by these enormous amounts: the key words here are “Americans say”.
This survey might actually be interesting if today’s savings expectations are compared to savings expectations in the past. If the survey had been run annually, say, then we might have some baseline against which to calibrate the finding that Americans say that they’re going to save 14% of their income. But we don’t, so it’s truly meaningless, graphs like this one notwithstanding:
You might as well run a chart of how much weight Americans have lost in the past, and then add a column showing how much weight they hope to lose in the next year.
Astonishingly, Alix Partners seems to think that this information is useful, and they’re plugging it as an example of the value they can add; their PR person, Brian Shiver, even says that the results of the survey will “require companies across almost every sector to rethink how they operate their businesses”. Er no, they won’t. More likely, they will require companies across almost every sector to rethink the utility of hiring large consulting firms.