The Designated Conservative recently came across this article (excerpt below – click here to read the whole thing), which does a great job of illustrating why “getting back to the way things were” economically is not an option for Michigan or the USA. Some say the new “frugality fad” won’t last – but all I’ve seen suggests that Americans have made another one of our generational shifts, one that will provide benefits long-term:
17 7 Ways Consumers Are Changing
By RICK NEWMAN
Are shoppers beaten down? Will thrifty spending endure? Or will the irrepressible American consumer come roaring back stronger than ever? Nobody’s quite sure, but here are 17 ways consumers seem to be changing, based on economic data, market-research studies and dozens of reports from customers themselves:
Less credit, more cash.
Consumer borrowing has fallen by record amounts, as Americans pay down debt and adjust to banks lowering their credit card limits. Credit card spending dropped sharply in early 2009, moderated, then started plunging again. But overall spending hasn’t fallen quite as much, which suggests more people are paying for purchases in cash. “I try to use money (not credit) for clothing, basic home equipment, and gifts,” says Margaret Jorgensen of Ste. Genevieve, Mo. “I don’t want to pay 18 percent interest on a pair of shoes or underwear!”
The end of the monthly payer.
Many consumers used to be comfortable piling up debt as long as their income could cover the monthly payments. No more. “The era of unbridled, debt-financed consumer spending is over, and the monthly payer is out of action,” Eric Janszen, president of iTulip, a finance-advisory firm, wrote in Harvard Business Review last year. As consumers focus more on their total debt, they’ll probably buy less and shun high-priced status symbols. But they’ll still spend on certain things. “Messages that center on family, life simplification, and getting back to basics will appeal,” says Janszen.
If you can’t count on anybody else, then you’re likely to rely more on yourself. Americans are taking more responsibility for their own finances and careers, undertaking more do-it-yourself projects, and learning how to cook at home instead of eating out. Travel spending is down, but sales of camping gear are up. Savvy workers are taking more midcareer courses to keep up with turbulent times.
Smaller is bigger.
It goes without saying that many things are getting smaller rather than bigger, including household budgets and people’s ambitions. “Smaller things now make the bigger statement,” says the Futures Co., a market-research firm. “Smaller portions, smaller houses, smaller cars, and local communities.”
A rental rebound.
The “ownership society” is over. After peaking a few years ago, home ownership rates, not surprisingly, have started a long journey downward, as foreclosures shake out people who couldn’t afford their homes in the first place and tough borrowing standards limit new buyers. The home ownership rate peaked in 2004–2005, when about 70 of households were occupied by owners. That percentage could sink to the low 60s within a decade. A renter’s mentality is extending to other big purchases, like cars and furniture: The Aaron’s rent-to-own furniture chain, for example, has been thriving.
Less window shopping.
When you browse, you buy—so more people seem to be eliminating window shopping as a casual pastime. Heather Mitchell of Friendswood, Texas, says that since she stopped making unnecessary trips to the mall, “it’s hard to measure the savings, since I would impulse-buy on those trips to stroll the stores. I’ve also saved a lot in gas and wear and tear on my car.”
More closet shopping.
Americans have piled up a lot of goods in recent years, and many people are surprised at how much good clothing or other stuff they’ve squirreled away. “I shop in my closet when the urge hits me to buy something new,” says Paige Hodges of Los Angeles, “and I always find a little treasure that I forgot I had.”