Transfixed by turmoil in the financial markets, we may be missing the year's biggest economic story: the end of the Great American Shopping Spree. For the past quarter century, Americans have gone on an unprecedented consumption binge—for cars, TVs, longer vacations and just about anything. The consequences have been profound for both the United States and the rest of the world, and the passage to something different and unknown may not be an improvement.

It was the ever-expanding stream of consumer spending that pulled the U.S. economy forward and, to a lesser extent, did the same for the global economy (the reason: imports satisfied much of Americans' frenzied buying). How big was the consumption shove? Consider. In 1980, Americans spent 63 percent of national income (gross domestic product) on consumer goods and services. For the past five years, consumer spending equaled 70 percent of GDP. At today's income levels, the difference amounts to an extra $1 trillion annually of higher spending.

To say that the shopping spree is over does not mean that every mall in America will close. It does mean that consumers will no longer serve as the reliable engine for the rest of the economy. Consumption's expansion required Americans to save less, borrow more and spend more; that cycle now seems finished. Americans' spending will grow only as fast as income—not faster as before—and maybe a good bit slower. The implication: without another source of growth (higher investment, exports?), the economy will slow.

Just why Americans went on such a tear is a much-studied subject. In a new book, "Going Broke," psychologist Stuart Vyse of Connecticut College argues that there has been a collective loss of self-control, abetted by new technologies and business practices that make it easier to indulge our impulses. Virtually ubiquitous credit cards (1.4 billion at last count) separate the pleasure of buying from the pain of paying. Toll-free catalog buying, cable shopping channels and Internet purchases don't even require a trip to the store. Pervasive "discounting" creates the impression of perpetual bargains.

There's something to this. In 1976, L.L. Bean began accepting credit cards over its toll-free lines; in a few years, sales soared. But the recent consumption binge probably has more immediate causes. One was the "wealth effect." Declining inflation in the early 1980s (in 1979, prices rose 13 percent) led to lower interest rates—and they led to higher stock prices and, later, higher home values. More Americans got into stocks; the number of customer accounts at brokers went from 9.7 million in 1980 to 97.6 million in 2000. People regarded their newfound wealth as a substitute for annual savings, so they spent more of their annual income or borrowed more, especially against higher home values.

The "life cycle" (a.k.a. demographics) also promoted the shopping extravaganza. People borrow and spend more in their 30s and 40s, as they buy homes and raise children. In the 1980s and 1990s, many baby boomers were passing through their peak spending years. That reinforced the wealth effect. Finally, the "democratization of credit" supported the shopping spree. At the end of World War II, it was hard for most Americans to borrow. Since then, mortgages, auto loans and personal credit have been liberalized. There's been a steady expansion of credit to new groups. By 2004, three quarters of U.S. households had debt.