The Mortgage Treadmill Versus Discretionary Spending and Enforced Leisure

Abstract

This paper undertakes a Post Keynesian/evolutionary examination of drivers of consumers’ spending in economies where productivity and per-capita income are rising. It argues that housing affordability will continue to decline as banks will be willing to risk facilitating ever-higher mortgage/income ratios, and that this will limit the ability of younger generations of consumers to reduce their working hours. Rising overall affluence will bring greater discretionary spending opportunities to some consumers, but nervous consumers may not be willing to spend more and environmental concerns may pose limits for discretionary purchases. The robotic revolution will have profound distributional consequences that will, if not addressed, enhance potential for instability.