It was the last decade of the millennium. You used dial-up to get onto the internet. You ordered stuff from catalogs or on your TV. You drove, took public transportation or rode your bike to the mall for some new duds. Maybe you even bought a few CDs from Sam Goody or Coconuts.
That was the narcissistic '90s—when the excitement of indulging drove consumers to spend and boost the economy.
But, they've retreated... possibly permanently. Blame it on a more sophisticated shopper.
Mark Stahlman, who runs techno-economic research firm TMT Strategies, said consumers are regularly cutting costs by shopping on the internet or smartphones. This decade has become the "doing what's right" and "being good, doing good" era. He suggests the growing trend is coming at a massive price to the overall economy.
"The internet is 'interactive' when compared to the 'passivity' of the earlier television era. This encourages people to seek out advice and to make cost and quality comparisons before buying." said Stahlman. "This shift from passive to active involvement increasingly applies to all products and services and cannot be reversed."
He said it's a dramatic change from the consumer economy of the 1990s.
"The entire economy needs to find a new balance. The shift towards 'needs-not-wants' is not just a baby-boomer phenomenon, but extends to young adults and even to teenagers. Since this has never happened before, the exact path the economy will take is unknown. But, growth can't resume until a new balance is found," said Stahlman.
He believes the scenario will prevent the economy from recovering for ten years .
Moody's Analytics Chief Economist Mark Zandi sees it differently. He said consumers have not backtracked, at least not yet. He cites the Bureau of Economic Analysis which found consumer spending accounted for 71% of GDP in this year's second quarter. That's roughly in-line with the 1990s.
"Their (consumers') share of the economy has remained largely unchanged over the past decade after rising steadily during the 1980s and 1990s." said Zandi. "I do expect the consumer share of the economy will decline over the next couple of decades as the U.S. sells more of what it produces to overseas customers, but that hasn't started in earnest yet."
Stephanie is Squawk Box producer. Follow her on twitter @StephLandsman
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