An article at CNN Money talks about “store sales slumping for yet another month.” Thomas Reuter a stock tracker, follows 30 chain stores and found that June’s sales dropped by 4.9% as a group, compared to June 2008 when it was up 1.9%. The article suggests this is strange because consumers have not been spending though they were given back extra money in 2009. So what’s going on?
Some say consumer spending would be down even lower without the stimulus. Others argue that suggest that since consumer trending is somewhat flat we’re not doing as badly as we could. Another reason is the stimulus back is in the form of slightly higher wages and more unemployment instead of a $600 or $1200 check in the mail. Thus families don’t have a large chunk to spend.
And yet economists are wondering, have americans turned a page? Is the real reason that Americans are starting to save? Last year, it was suggested only 1/3 of the stimulus checks were actually spent and 2/3 saved or sent to debt. This year it’s probably even more likely the money is going to savings or debt.
Finallya consumer survey showed that the wealthiest consumers are spending less as well. Those Americans with the most disposable income are spending 15% less than last year. So if the people with the largest spending are cutting at least 15% does that mean everyone else is cutting even more?
I think we’ve turned a page. I noticed a lot of my friends are talking about saving more and paying off debt. A lot of people I know are taking paycuts, thus cutting their spending in turn. In general everyone I know is more worried about their jobs and discussing scaling back vacations, not buying a new car, etc. But will these habits last?
I think so. The longer this recession lasts, the longer people’s habits change and become more ingrained. The more used to we’ll become used to living within our means. Do you think we’re turning a page in American spending habits?
10 responses so far ↓
1 Terry Pratt // Jul 12, 2009 at 6:15 pm
The American economy is doomed for a long time.
Welcome to the downward spiral; reduced spending leads to job losses, which in turn leads to…
Good luck!
2 fengshui // Jul 12, 2009 at 10:19 pm
I haven’t noticed a “bigger check”…. between state and federal income tax, fica, and ss all taken out, about 31% of my check is “garnished” every 2 weeks. I haven’t noticed an increase at all….. ???
3 Pat O // Jul 12, 2009 at 11:27 pm
I believe this economy will change spending habits for generations to come.
My parents lived through the Great Depression and I notice similarities with the stories they told and what is happening now.
The frugal mind set I see in people is going to be around for quite a while, and the longer a person does something , the more likely it will become a habit.
4 Meg from FruWiki // Jul 12, 2009 at 11:58 pm
We stopped spending like crazy shortly before the recession — yeah, blame us for the whole thing
At the very least, a major cause of the recession was people like us who spent like salaries and equity would only go up and up and there’d always be time later to pay things down. And though I can’t speak for all of the over-spenders, I don’t see us going back to the way things were.
We’ve actually been fortunate that the recession hasn’t affected us much directly. In fact, the recession has made it easier for us in some ways because we see that we aren’t alone in being in debt. And it’s now more acceptable to be frugal. Plus, seeing how much others have lost, I appreciate what we have more and am very glad we turned things around (hopefully) in time.
So, seeing how the recession didn’t affect our spending much, I don’t think it’s end will either. I don’t see us changing our lifestyle much even when we’re out of debt (which will be quite a while after the recession ends, I’m afraid) or even if we become wealthy because we’re happy enough with what we have — and a lot happier than we were when we were spending like crazy. And I hope that for the planet’s sake, which is to say for all our sakes, that more people do take this opportunity to see how little they really need to be happy.
5 LAL // Jul 13, 2009 at 7:24 am
I don’t think this recession will change me either. Rather life circumstances will!
6 JoeP // Jul 13, 2009 at 8:35 am
Good points, Meg. I think for those who were thrifty, and even frugal, a weak economy is actually a good thing for them. Their lifestyle doesn’t have to change very much, since they already know how to live within their means.
A stronger economy benefits everyone with job growth and prosperity, but the flip side is that interest rates will probably rise, which means those with credit card balances and ARM’s will feel the pinch soon.
7 LAL // Jul 13, 2009 at 12:25 pm
A stronger economy benefits people because they are able to keep jobs. In a weak economy the job market is the problem.
8 R. May // Jul 13, 2009 at 12:42 pm
Nope. I think very few people will change permanently. First of all it’s not bad enough. Second of all it’s against human nature.
They didn’t in any previous recessions – albeit not as bad as this one, but they weren’t peachy either.
The Great Depression affected the immediate generation of adults and the kids, but the effect diminishes over time.
The American culture is one of excess. How many shows are there on television that depict this? I haven’t seen my super sweet (disgusting) sixteen go off. How many get rich quick schemes exist?
How many people have you read articles about who are in a pickle because they’ve lost their job and don’t know which to pay first the cable or the cell (real example from newsweek several months ago).
I see very limited signs of people truely changing their lifestyle.
9 JoeP // Jul 14, 2009 at 10:38 am
I agree with R. May. There will be temporary belt-tightening, but as soon as things pick up, most will be right back where they were before this economic slump started.
I’ll repeat that those who had been exercising restraint (frugal, thrifty) are probably weathering this better than the average American. They will probably not change in either direction.
We’re going to spend a lot of our retirement savings…when we retire!
10 LAL // Jul 14, 2009 at 3:09 pm
I think we’ll have to see if people go back to buying overpriced cars and fancy homes. And how expensive retailers are doing really.
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