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Americans return to thriftiness, trim fat from spending. Economic crisis sets up what could be long-lasting trend
By Dan Sewell
Associated Press
Published on Thursday, Nov 20, 2008
Frugality is making a comeback.
Fearful that economic conditions could get worse and stay that way, Americans are showing an enthusiasm for thriftiness not seen in decades.
This behavioral shift isn't simply about spending less. The New Frugality emphasizes stretching every dollar. It means bypassing the fashion mall for the discount chain store, buying secondhand clothes and furniture, or trading down to store brands.
There's more business for repairmen and less for salesmen. Consumers are clipping more coupons and swiping their credit cards less.
Not long ago, yoga teacher Gisele Sanders shopped at the Nordstrom's in Portland, Ore., and didn't think twice about dropping $30 for a bottle of Chianti to go with dinner. That was before her husband, a real estate agent, began to feel the brunt of slowing home sales.
Now Sanders, 53, picks up grocery-store wine at $10 or less per bottle, shops for used clothes and plans to take her mother's advice about turning down the thermostat during winter. ''It's been a long time coming,'' she said. ''We were so off the charts before.''
That kind of scrimping might be good for stressed family budgets, but it's bad for the nation's overall economy — and that has the potential to reinforce the miserly mood. Yet with
home prices, 401(k)s and job stability suffering, such frugality is likely to be more than a fad.
''It is a whole reassessment of values,'' said Candace Corlett, president of the consulting firm WSL Strategic Retail. ''We've just been shopping until we drop and consuming and buying it all, and replenishing before things wear out.
''People are learning again to say 'No, not today.' ''
The trend is evident in where cash registers are ringing, and where they are not.
Wal-Mart Stores Inc., BJ's Wholesale Club Inc. and Goodwill thrift shops are thriving, while Saks Inc. and Abercrombie & Fitch Co. are struggling. Likewise, as casual dining chains such as O'Charley's Inc. and Red Lobster see fewer customers, McDonald's Corp. is serving more, including people who have given up $4 Starbucks Corp. drinks in favor of the fast-food chain's expanding coffee menu. Even Spam has made a comeback.
Tellingly, Wal-Mart said recently it has seen a 2 percent jump this year in shoppers from households earning at least $65,000.
Retail sales fell 2.8 percent in October, the fourth straight monthly drop, as unemployment hit a 14-year high of 6.5 percent.
The National Association for Business Economics on Monday projected that the overall U.S. economy, after shrinking at the annual rate of 0.3 percent in the July-September period, will contract at a rate of 2.6 percent in the October-December quarter.
Cutting corners
The housing bust, credit crunch and stock market plunge have eaten away at the retirement savings and confidence of consumers who for years operated on a buy-now, pay-later ethos, chasing bigger homes, bigger cars and better brands. That is forcing families to bring their spending in line with their income and to rethink priorities.
''Everybody has been trying to keep up with the Joneses and trying to look rich when they're not,'' said Erin Pettingill, 24, a married mother of two preschool children in Provo, Utah, who started a blog called ''Iamfrugal.''
''You can't necessarily have everything you want when you want it,'' she added. ''And there's nothing wrong with that.''
Not long ago, if Ann DeRoo needed something for the house or another ingredient for that night's dinner, she would simply jump into her car and go get it. Not anymore.
''Now we stop and think a little bit,'' said the mother of three in suburban Cincinnati. ''We don't just run errands and buy things. We have everything listed that we need.'' And that list doesn't include DVD rentals, dinners out or new plants and flowers for the yard.
Even though gas prices have plunged below $2 a gallon from double that level a couple months ago, DeRoo said her family will continue to combine trips to save on fuel.
Economists and consumer experts say it's difficult to predict how long the pullback will last, particularly among generations who have never seen such a sharp economic downturn.
''This is scary stuff and confidence is such an elusive thing,'' said Larry Waldman, senior research scientist at the University of New Mexico's Bureau of Business and Economic Research.
New way of life
Timothy Duy, an economics professor at the University of Oregon, is convinced ''the economy is moving away from consumerism.'' Just how far remains to be seen, but a recent Pew Research Center survey found that more than half of Americans say they have cut back in the past year and about half agreed that people ''should learn to live with less.''
People are not only buying cheaper, they're buying less, said Joachim Vosgerau, assistant professor of marketing at Carnegie Mellon University's Tepper School of Business who specializes in consumer behavior.
''It seems like this trend is only going to continue,'' Vosgerau said.
It doesn't require a lost job or decimated retirement account to make shopping for new things seem wasteful.
In Maine, Sindi Card said her husband's job is secure. But because the couple has two sons in college in the uncertain economy, she tried to fix her broken 20-year-old clothes dryer. It was a stark change from the past, when she would have taken the old model to the dump and had a new one delivered.
With help from an appliance-repair Web site, she saved hundreds of dollars. ''We all need to find a way to live within our means,'' she said.
Frugality is making a comeback.
Get the full article here.
Comments
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Orrville, Oh
Posted 03:44 PM, 11/20/2008
As long as we, the government of the people, by the people, for the people supports foreign and domestic investors and stock holders marketing more stock dividends (money) quarterly in the wholesale and retail price of every product and service Human Beings use for life. That gets only product and service. To measure and maintain the strength and growth of this unaffordable economy and prove that only money that can only be used to identify agreed value of sellers and buyers in the marketplace has value?
The economic crisis will continue and life in the USA will continue to be UNAFFORDABLE!
