The force behind large cars, houses

2005-03-12T00:00:00Z The force behind large cars, houses nwitimes.com
March 12, 2005 12:00 am

MIKE HOBAN

Alan Greenspan, Mr. Fed Chief, pay attention to this column.

One of the more perplexing economic mysteries of the last 10 years has, I think, been solved. Right here. Right now.

Since the mid-90s, despite a dramatic rise in the costs of energy, millions of Americans have purchased bigger cars and bigger houses, confounding the experts. They can't explain n and economic theory can't explain n why people would want to spend a lot more money supersizing those things.

Families aren't getting larger, so why are peoples' cars and their homes, and of course their payments, getting larger?

Business forecasters and economists have regularly predicted that the housing boom will fade and the sales of SUVs will level off, because high energy costs should trump low interest rates. And then when each quarter's numbers are announced, they scratch their heads, shuffle their feet and sheepishly announce that consumers' purchases for those two items have for some reason exceeded expectations.

Scratch and shuffle no more.

The key to the mystery boils down to one word: Costco. That's right, Costco, the warehouse-style store that has expanded throughout the country the last 10 years or so, the same timeframe as the big house/SUV boom.

Costco, for the uninitiated, specializes in bulk-packaged items. Want to buy a roll of toilet paper there? You can't. Want to buy enough toilet paper for a platoon? Costco's the place.

Almost everything comes in 10 packs or 24 packs or giant jars, all with very attractive prices. My wife and I are regular Costco shoppers and we have a bottle of vitamins the size of a toaster oven.

I hope it's not true that "you can't take it with you" because we have enough vitamins in that bottle to last us well into the afterlife. But it was such a deal.

We also have enough Costco paper towels in the basement to single-handedly take care of the spill from the next oil tanker disaster. But it was a challenge getting those towels into the trunk of our full-size car and then finding a place to store them once we got them into the house.

And that, my friends, is why people are buying larger cars and larger houses. They need to transport their Costco mega-purchases and then they have to store all that stuff. Most older homes simply don't have basements or spare rooms large enough to become residential warehouses for all those paper products, tubs of salsa, and big-as-a-couch cereal boxes.

But all that big, empty space in those now-bigger homes will at some point get filled up with more Costco stuff. "Dear, I know we didn't need this four-pack of big screen TVs, but it was a such a deal!"

And the search begins anew for a still-larger house.

So, economists, as long as Costco and similar concept stores such as Sam's Club keep expanding, I think we can expect the demand for bigger cars and bigger houses to continue unabated. Call it the "Costco Corollary."

Mike Hoban, of Munster, is a senior consultant for an international training and consulting firm. Send mail to him care of this newspaper, or contact him at mjhoban@sbcglobal.net

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