More shoppers supporting local stores during recession and economic impact of the stimulus

According to this article in the Seattle Times. It happens I have been somewhat more conscious and doing the same thing myself, such as buying toys as gifts from Sullivan's Toy Store on Wisconsin Avenue NW, or baby-related stuff for friends, at Now & Then, a gift shop in Takoma Park.

Are you buying more locally?

On this broad topic of consumer expenditure, there is an embarassingly poorly reasoned op-ed in the Washington Times, written by a political science professor (not an economist), "The key to economic stimulus success." He complains that spending money on building infrastructure doesn't "build consumer products." Duh. It's like those old tv ads by the chemical company BASF, "we don't make X, we make the chemicals that make X better." Economic activity by the "private sector" is supported by utilities such as roads, transit, a regulatory system, electric lines, the Internet, etc., which are called public goods, and provide the glue that makes "the market" work.

The big thing that he doesn't seem to understand is the difference between the "direct" and "indirect" impacts of economic spending. Indirect effects are the "multiplier" effects of "direct" spending. It happens I have been writing about this in the context of a city in Maryland for a study, and in that state, for example, the multiplier effect or indirect economic impact of tourism spending is 1.54, meaning that 54 cents of additional economic activity is produced in terms of wages and other spending, for each dollar spent on tourism.

(For boating--sailing and power boats--the multiplier effect is about 1.28, meaning that each dollar spent by a boater generates 28 cents in additional economic activity. Etc.)

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Plus, the issue with the economy isn't that we need to build _more_ consumer products. It's that consumer products aren't being bought. They are piling up, production lines are closing, etc., in the face of too much supply. I sure would hate to be a professor with that article to my name.
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Similarly, every dollar spent on construction has a multiplier effect too. According to this op-ed, "Economic Multiplier Effect Makes Transportation Tops" in Engineering News-Record, the multiplier effect in California for such projects is 1.97 or 97 cents in additional economic activity for each dollar spent.

Still, I think that societally we may in fact begin to experience a dialing down of general consumerism--buying stuff--as people begin to reconcile their lifestyle and their incomes as we may no longer be able to count on stock and house appreciation to fund other purchases.

And I wish that DC's spending from the "economic stimulus" package (see "Now, D.C., About That Stimulus Money . . . " from the Post) would be directed to investments with a much longer and greater overall economic impact, rather than what it will likely be wasted on. There is a good article by Inga Saffron, the urban design writer for the Philadelphia Inquirer, about this same topic there, "Changing Skyline: Prudent stimulus strategy." Although there they are looking at smaller projects, and developing green infrastructure.