GROSS: No, I don't think that efficient consumers are bad for the economy, any more than efficient companies are bad for the economy. The great problem we've had in the last several years - and we continue to suffer the after-effects - is that millions of our citizens couldn't afford to meet their financial commitments. The inability of people to keep up with mortgages, credit card loans, and other consumer loans has had disastrous consequences for our financial system, for companies, and for the economy at large. Financial failure begets financial failure. Just so, financial success begets financial success. If we buy 500,000 fewer cars, then a bunch of autoworkers and car dealers will suffer. But if 500,000 people are freeing up the $6,000 a year they would have spent on car payments, taxes, and insurance, and using the proceeds to, say, avoid foreclosure, or stay current on payments, or invest in their own education - that's a significant positive.
There was a great story in the New York Times about a small heating oil company in Maine whose poor clients were suffering horribly, and the difficult choices the owner had to make about whether to deliver fuel to people who couldn't pay. People around the country send in tens of thousands of dollars to help out. The money all went to pay for heating oil. Imagine if the money -and all the public aid those customers had received - went to weatherize leaky trailers and do things that would enable them to reduce their annual fuel consumption by 20 or 30 percent. Next winter, they'd all have much more to spend at local businesses, the heating oil company owner would have a more sustainable business and wouldn't face the same number of wrenching decisions.
THOMPSON: Do you see efficient consumption playing into the export game? If we save more like Germans, will it help us export more like Germans?
GROSS: I don't think so. We're actually quite good at exporting. Monthly exports have risen from $124 billion in April 2009 to a record $186 billion in April 2012 -- up 50 percent. Our 2011 exports were $2.1 trillion -- also a record. The opportunity is really more in how efficient consumption can create new businesses that can then be exported. In other words, if a Zipcar can catch on and gain scale in the U.S., it can quickly expand abroad. Groupon and Living Social are now in dozens of countries. In countries where energy is more expensive, energy-saving products -- like, say, the Nest thermostat -- have the ability to catch on.
THOMPSON: Is consumer efficiency a fad? Is the natural state of the American human to borrow and spend, and we're only "pretending" to like efficiency because we're temporarily overloaded with old debt and flat-lining wages?
GROSS: I definitely think it is cyclical. I've reported through three different recessions. And I"ve either written - or read - the same article about how we've learned our lesson, how a nation of spendthrifts is turning into a nation of penny-pinchers and coupon-clippers. Then once growth returns and credit flows, the coupon circulars go straight into the garbage. There are two factors that may lead efficient consumption to last longer this time around. First, if you read your Reinhart and Rogoff, you'll know that recoveries from debt-induced crises tend to be slow and painful. There will be no return to boom times. People will be working out from under their debt load for a long time. Mortgage equity withdrawal [MEW] - i.e. borrowing against your house to go to the Olive Garden - was a huge factor in spurring consumer spending in the 00s. But given where housing is now, there's not likely to be any MEW for years to come. So consumers will have to live by their wits for the next many years.