Americans save more, spend less. Will it last?
Evidence of a new consumer mindset keeps piling up. Today's New York Times front page reports Americans are becoming savers. When they shop, it is for necessities. They are spending less on impulse purchases. "We have gone in a radically short time from conspicuous consumption to conspicuous saving," Anne Brouwer senior partner at Chicago-based retail consultants McMillan/Doolitle, LLP, told me last week. "Everybody, retailers included, recognizes this is a major change -- lasting change."
As the Times reports, a patent attorney in Austin now grows her own vegetables; a Macy's saleswoman says people are running in and out of the store with only the basics they need, no more. The Times marshals evidence that this is part of a change in consumer behavior that will last after the economy gets back on its feet.
We have seen the signs out there all along: Penny pinching parents have made the back-to-school season dicey for retailers. And early indications are that the holiday season will be a hard sell, too.
Nearly every retailer reporting results for the second quarter either fell short or met Wall Street's profit expectations by cutting costs and inventory. The very few that managed to post a win, like The TJX Cos., (TJX) were stores that clearly played as the alternative to expensive stores.
The depth and width of this recession make it different than the recession-lite dip we experienced after 9-11. Then, the government asked consumers to open their wallets and give the economy a boost. Americans complied and the recession was over by the time economists finally agreed there had been one.
Not this time. Cultural mores are shifting. Being unemployed doesn't have the stigma it used to. Shopping at thrift shops now gets you admiration, not pity.
Even American youth, those self-involved champions of brand-name shopping, have not been shielded by the reality of this recession, says Brouwer. With all the media and social networks they're exposed to, they are very aware of the economic conditions and what caused this credit crunch, so they may actually grow up thriftier than their parents.
Since consumer spending makes up to three-fourths of U.S. economic activity, this cultural shift could be bad news for the economic recovery. But given that it was a credit crisis that got us in this mess, maybe learning to live within our means is a good thing.
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health bill?
Fed stalls on Chinese bank deal, costs taxpayers $1.7 billion
Dell in a handbasket: Should founder Michael Dell resign?
Reader Comments (Page 1 of 2)
8-30-2009 @ 12:05PM
Amey said...
This story inspired me to go to shopping at Goodwill today!
Reply
8-30-2009 @ 1:21AM
Denise Figueroa said...
Amey I just might go shopping at Goodwill myself if this Congress of ours doesn't get on a roll and pass another extension to unemployment benefits. Oh by the way the Salvation Army has clean, new and semi-new merchandise all the time. It's nothing to sneese at.
I got a Lands End coat for only $20.00 bucks and it was brand new. When I check there sight for the original value it was listed at $156.00. Just think how many Dunkin Dounuts Coffee you could treat yourself to with all your savings. Take care, Denise
8-29-2009 @ 8:23PM
JH said...
Im one of those people who had to start living with less a few years back, and other than occasionally having to do without until I have enough in my debit account to pay for things like tires or appliances, its not too bad. Ive managed to quit smoking as well to save money and have enough now to hopefully buy a house(my credit was ruined too). I wont ever have another credit card and buy used cars and other things I need and find my life a lot less stressed not having to find enough to make credit card payments each month.
Reply
8-29-2009 @ 9:10PM
Teva said...
Svaings are up from a average of 3% to 7% now that means that our economy has to downsize to live with
4% less income in good times. I say go ahead and save but remember you can't take it with you so live a little.
Reply
8-29-2009 @ 11:48PM
Kim said...
NO MATTER WHAT THE BIG MONEY REPUKES SAY, THINGS WILL GET WORSE FOR THE AVERAGE AMERICAN. PRAY OBAMA CAN FIX THE BUSHWHAKING WE TOOK FOR THE LAST 8 YEARS....
Reply
8-30-2009 @ 11:30AM
Jan said...
Things are going to get much worse under obama. All we can do is pray that his policies are stopped. We must save, not spend. No one knows what obama is going to attack us with next. He has quadrupled the deficit, surely not a good sign. Our credit card debt is going down nicely as our savings grows. We can survive obama, hopefully.
8-30-2009 @ 11:56AM
rolf said...
Wait till your federal taxes triple or your benefits get cut, lets see if your opinion changes. That will happen at the end of next year when capital gains taxes go up, cap and trade hits and health gets rolling. You will br howling.
8-31-2009 @ 8:04AM
Bud said...
We may have gone a few hundred million in debt, but we had no forecast for trillions in debt for our kids and grandkids and for me great-grandkids to pay for. Obama's a good talker, but he has no other qualities!!
8-30-2009 @ 12:58AM
Rick said...
It is easy to understand..This gov't has people terrified because of what they are pushing and what they are saying. People have reason to be scared and cautious with their money.
Reply
8-30-2009 @ 6:33AM
Sarah said...
Saving more, spending less money on things we don't need - good for us, bad for Wall Street! But what has Big Business ever done for us except take our money?
Reply
8-30-2009 @ 12:15PM
Billy Burns said...
If you have lived to be 80+,you will have already been POOR,however so was everyone else. So you work all your life, have fun, fall in love,(which by the way love becomes companionship)make a little money which the banks,insurance,&health care try to take from you (and they do) and you're poor again. God bless the special devoted names: Carter,Clinton,Hillary,Kennedy and now Obama. We may all get out of this mess.Without the help of Banks, Wall Street,and greedy friends and suckers that we meet along the way.
Reply
8-30-2009 @ 12:16PM
lisa said...
We have also made changes. Refinancing to consolidate and GET RID OF credit cards, paying cash, canning food, raising rabbits, fixing our cars (my clunker is staying with me) shopping for just what we need. I like this trend...
Reply
8-30-2009 @ 8:45AM
lisa said...
Oh, and when the Dow hits 10,000 I am pulling all of my money out.
Reply
8-30-2009 @ 12:16PM
J. Skinner said...
I think much like the depression we'll see this affect descretionary spending for a generation or more. For sure retirees that lost so much of their savings will never recover, many of the older workers losing jobs today will never earn as much again, and then there are younger people that will most likely end up earning less as a norm. I'm like JH above, and had to cut spending earlier and am getting use to money saving tactics and I've already completed all but two of my Christmas gifts, so there won't be any holiday running for me. A lot of my friends are doing the same as so many of us now discuss saving money all the time.
Reply
8-30-2009 @ 10:32AM
LJL said...
We must return to a consumer driven economy. Sellers overpriced goods, homes, food, etc. until they weakened the consumers. Further, jobs were lost. A faster comeback would be realized if salaries had been cut rather than jobs cut. Greed overwhelmed the consumer. We are now returning to a consumer driver economy. Though it will take t ime, I have faith that a new economy is on the rise along with a more enlightened consumeer.
Reply
8-30-2009 @ 10:41AM
John George said...
I am amazed at all the great comments above; I am honored to be among you folks!
My wife and I have been trying to live "thin" for years and, while at first we thought of it as a rude come-up-pence, we have grown to enjoy it; we enjoy watching prices spiral down, we enjoy not powering up China's economic recovery, we enjoy making every dollar count and we enjoy being truly free Americans; free of dept!
I agree fully that this is just the start of a new grassroots economic movement that will last for generations to come and I feel sorry for our poor politicians who were convinced that all of us out here were just a bunch of idiots.
For the Republic!
John George
North Carolina
Reply
8-30-2009 @ 12:23PM
Johnny Jet said...
Thank Bush #2 for what Obama can try to mend.
Reply
8-30-2009 @ 2:15PM
dee said...
I can't believe your comment. Obama has already spent more than all presidents in the history of our country. He has tripled the deficit in 6 months and moving toward a lot more. Are you watching this unfold before your very eyes? Have you checked out who his czars are? Admitted communists? The weather underground? People that have been arrested. Good lord people. Please read and study. You don't want to be hit by a two by four.
8-31-2009 @ 8:03AM
Derrick said...
Johnny and Dee,
I am sure you both feel very strongly about your political beliefs, but what you need to recognize is that both parties and both presidents share in the blame for the economic manipulation or our lives and propaganda that they have fed and are feeding to the ignorant masses. I can promise you that neither president would have done much different than the other, and that this outcome was going to occur, regardless of who the president is/was.
8-30-2009 @ 3:24PM
Al Wunsch said...
Whether you blame Bush or Obama, the people are getting it. We are in a self protect mode to save and not spend more than we really need. I don't expect things to get better so long as the Obama admin continues to try and move us toward a socialist government. That means a lot of wasteful spending and increased taxes. It is easy to see what needs to be done to take us off foreign oil, lower energy costs and intice businesses to start up, invest and/or come back to the U.S. None of those types of policies are in the offing by the Obama admin. Additionally, the continual spin (technically correct but misleading) by the Obama administration only leads to further erosion of support and the continual push to get even with the former administration doesn't help. We really do need term limits in congress.
Reply