Americans have begun splurging again, but they're limiting their indulgences to small items, like haircuts and coffee, rather than big items, like vacations and fine dining.As the economy improves, Americans are beginning to splurge again -- but in a small way.

Meals at casual sit-down restaurants, a daily cup of gourmet coffee and personal-care services, such as haircuts, hair colorings, manicures and facials, are among the so-called "small luxuries" that are trickling back into Americans' budgets as job prospects improve and the economy expands, according to a report released last week by the National Retail Federation's Stores Magazine. Others include department-store purchases, new shoes and even fancy handbags.

But Americans remain cautious about big purchases, considering specialty-store items and vacations just about as expendable in 2010 as they were in 2009.

The Untouchables

In the NRF's survey of more than 5,000 adults in December, approximately 42% called haircuts or hair colorings an "untouchable" part of their budget in 2010, up from 37% in 2009. The "untouchability" of manicures and facials also grew by 3 percentage points and 2 percentage points, respectively.

Additionally, about 32% of those surveyed said a casual sit-down meal was a necessary part of their budget, up from 29% in 2009, while department-store purchases' "untouchability" jumped 4 percentage points last year, according to the NRF.

"As consumers cut back on bigger-ticket items, they typically still 'spoil' themselves with such treatments," says John Long, retail strategist at Kurt Salmon. "It makes them feel better about themselves and their appearances even if they can't spring for a new suit or dress."

The report provides some insight into consumers' changing spending habits as the economy slowly recovers. U.S. unemployment fell to 9% last month after stalling in the 9.5% range for the previous year-and-a-half. The Federal Reserve predicts that the economy could grow as much as 3.9% this year.

Not "The Fuel of Life"

The restaurant industry may be seeing the biggest change from the increased spending so far. Americans are coming back to casual sit-down restaurants, such as Darden Restaurants's (DRI) Olive Garden and DinEquity's (DIN) Applebee's; coffee shops, such as Starbucks (SBUX); and even fast-food chains.

Fine-dining restaurants, however, haven't yet seen the rebound, for the most part. Americans considered them just about as expendable in 2010 as in 2009, according to the survey.

"Casual dining is an affordable indulgence. A $12 to $14 price point won't break the bank," says Darren Tristano, executive vice president at Chicago-based hospitality consultant Technomic. "As for fine dining, we're all still adopting more frugal spending behavior."

As Harry Balzer, chief industry analyst at NPD Group, puts it: "Fine dining is really the art of food. It's not the fuel of life."

What expenditures are safest from consumer budget cuts? Internet and cell-phone services. Both categories became even less expendable to consumers last year, according to the NRF. Almost two-thirds of the respondents called mobile-phone service an "untouchable" part of their budget, while more than 80% called the Internet a must.

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USA Consumers have CREDIT CARD and that's is the only reason why many keep spending but not paying back in full and numbers for USA Personal debt is reach $2,4 Trillion...if that number don't exist for personal debt anybody can say ok...ok...ok...peoples still spending REAL money but like this ahhh c'monnnn....if we pull out C.C. out of the system completely only after that anybody can see REAL power buying for USA Consumers...AMEN....

March 01 2011 at 4:08 AM Report abuse rate up rate down Reply

As the Economy improves are you kidding?

March 01 2011 at 1:12 AM Report abuse +1 rate up rate down Reply

liquor store stays pretty busy.

February 28 2011 at 2:20 PM Report abuse +3 rate up rate down Reply

just the other day I supersized my #3 at mickey d's. i know that sounds extravagant, but hey, had to reach for the stars. plus i was hungry

February 28 2011 at 2:20 PM Report abuse +2 rate up rate down Reply

Bottom line is so many Americans are idiots ! We see high gas prices we complain while we drive our SUV's and charge it. Food prices going up and up we complain while we take the family out and charge it. They go shopping and charge it! People get a social security check complain it is to little and then go to the casinos. What is the matter with all of this? Americans like this and greedy oil jackels drove us into a recession in 2008 and now we are heading for a DEPRESSION! Makes me so mad. We cut costs, use coupons, bought smaller cars, drive less, shop less, takes trips oh so much less, and you know what we buy the bare necissities and we pay for it! If we charge something we pay it off in full!! We shop outlets. How about Americans opening up their eyes and being more responsible!!!!!! We can control so much of what happens if we just use some smarts.

February 28 2011 at 1:30 PM Report abuse +5 rate up rate down Reply
1 reply to donnareed4's comment

problem is it is too late for many. we are in the second generation of spend aholics. if you were born much after 1955, the chances you got the basics---work, watch what you spend, buy only what you can afford, and while you are at it, save. we will get past this in 5+ years but it won't keep these folks from doing it again. the only upside to this whole mess is credit will stay fairly tight for 7 to 10 years.

February 28 2011 at 2:24 PM Report abuse +1 rate up rate down Reply

Only proves consumers are keeping their budget spending to the essentials. All of the items have a return of some kind. We all have to eat so buying at a restaurant not only provides food, but also decreases our use of water and soap to do the dishes, energy to cook the food, etc. As for the clothing and nail jobs, for people looking for work, such items are helpful in an interview, etc. There is further evidence of this in the number of movie tickets sold this past year. One has to go back to 1996 to find a lower yearly number than the 1.32 billion sold in 2010. But then other than some enjoyment and entertainment for a couple of hours, there is really no return on movies. So out of the budget it goes.

February 28 2011 at 10:31 AM Report abuse +1 rate up rate down Reply