Daily Times

Many attribute the turbulence with recessionary fears to the uncertainty of consumer spending. But in recent years, the prospect of denying global debt as a systemic issue has started affecting bond markets, sustainable consumerism, and the ability to distinguish between recessionary times and overall quarterly pessimism. Now, what we want to do is look at three factors here: the tendency to which consumers have confidence in spending, the ability of governments to control it, and how businesses play into the global spending goals.

For long, the notion that the economy is singularly dependent on simple demand and supply functions has been proven to be an accurate determinant of economic growth. But in recent years, factors contributing to integration in the Global Economy, have made it impossible to narrate the extent to which sustainable consumer spending has proven to be.

According to an IIF estimate, global debt reached 313 trillion dollars in 2023. This crosses through governments, households and businesses, all of whom have been progressively increasing consumption, especially after the pandemic despite the ‘Pandemic Blip’. Now, some may wonder why this matters to us as a society, since the main dealers in this economic situation are the individual consumers and governments. And while, yes, global debt is caused by a segmented society, it eventually trickles down to everyone’s pockets and general standard of living.

For long, the notion that the economy is singularly dependent on simple demand and supply functions has been proven to be an accurate determinant of economic growth.

Let’s think about this. Governments, especially, emerging economies, spend on education, health and social security benefits for the general public. Due to rising populations and global inflation, this spending has shot up. Now, of course, governments must continue to spend on the economy, but to what extent?

With this large a value of debt, concerns of a global recession, as well as those of defaults are a norm. The 2020s will forever be threatened with the thought of a looming debt crisis. This can impact everyone in society. Oftentimes, economists assume the MMT theory will hold and the supply and demand in an economy balances out the case for debt and borrowing by consumers.

However, contrary to common belief, inflation is not the only driver of balancing consumer markets. Beyond a corrective measure, fixed incomes tend to be determined by the amount of debt held by firms in an economy. Those incomes-when given on debt-can have minimal to no impact on GDP growth, eventually leading to the concept of Bezzle. This is when fictional wealth tends to be the main player in an economy and often causes myopic functions to central banks in terms of how much money, people actually have.

This can in turn shoot up interest rates, causing global insecurity of investment, and the inability of governments to make use of regulations.

The minimum level of Federal Debt crossing 98% of the total budget appropriated for a certain year, is often crossed in developed economies. And the assumption that this value is an imaginary figure, representative of local investment is just simply wrong. The concept of consumerism revolves around utility enhanced by increased buying behaviour.

From a consumer standpoint, that means heightened confidence in the economy, and making up for demand shocks, presented by the Pandemic and also a recurring side effect of the 2009 recession. If we are to sustainably consume, in line with SDG 12, someone is going to have to step up and say no. This unhealthy confidence is not only playing into inflation but also depleting our resources further pushing inflation down the line to 2030.

All the goals we’re working towards as a society, be it limiting fuel consumption, or spending more on building communities – all of its going to be a drop in the bucket for future generations and the demand and supply patterns that may follow. Businesses are now of ample importance here.

They can collaborate with governments to set limits on the consumption of goods and services. Not creating scarcity is key here, but the notion that the banking sector can get away with financing debt to consumers and leave them out of the equation when it comes to accountability is unfathomable. In the future, looking towards incentivizing banks and financial institutions to limit overdrafts and avoid the drip, drip, drip of credit imprinting itself on wallets. Because again, sustainable consumption isn’t just green consumption, it’s also the ability to sustain life and economics in the planet for centuries to come.

The writer is a columnist and a linguistic activist.