The New Frugality: Economy forces Americans to return to thriftiness
November 23, 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.
Zee McClintock shopped with her son, John McClintock, at the Grocery Outlet in Carson City on Thursday to help him out after he lost his job.
Shopping at the discount store can help in the slow economy, she said.
Recommended Stories For You
“Pizza at home,” she said, “is much cheaper than having it delivered.”
But getting back to work can be hard ” and a sign of the times.
McClintock said she called a state unemployment service and had to wait an hour before her call was answered.
“And they said it was a slow day,” she said.
Mark Delacruz, an information and technology student at Western Nevada College, said he’s had to learn how to save money being a college student.
“I’m pretty thrifty anyway. I’m not your typical Nevadan,” he said.
Too many people, he said, spend too much money on gambling, cigarettes and alcohol.
Amber Broyles of Carson City said she’s had to cut back on spending and doesn’t buy as many groceries as she used to.
“Milk for sure,” she said. “Milk is crazy.”
She said she hopes the economy will get better soon, but she’s not sure it ever really will.
Scrimping may 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 and Goodwill thrift shops are thriving, while Saks and Abercrombie & Fitch are struggling. Likewise, as casual dining chains such as Red Lobster see fewer customers, McDonald’s is serving more, including people who have given up $4 Starbucks 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 current October-December quarter.
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.”
Economists and consumer experts say it’s difficult to predict how long the pullback will last, particularly among generations of consumers 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.
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, an 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.
Corlett said one recent WSL Strategic Retail survey detected a “saving is cool” culture developing, with more than half of those polled agreeing they take pride in the ways they’ve found to save money. “The longer this (downturn) lasts, the more entrenched it will become,” Corlett said.
Faced with a spending decision, Baby Boomers sometimes ask: “What would Ward Cleaver do?” They know the proudly prudent father from “Leave it to Beaver” would tell his son to get a paper route and save his money until he could buy himself the hot new toy he wanted.
“When I was growing up, we heard ‘No’ a lot,” Corlett said. “It wasn’t done in a mean way. Then a generation of parents grew up successful, and their kids had to have their own rooms, and there was a run on Elmos and Wiis and whatever else.”
Indeed, some of the behavior associated with the New Frugality betrays an America having difficulty letting go of expensive tastes.
Donna Speigel has built a Cincinnati-area chain of upscale consignment shops called The Snooty Fox aimed at women who still have to have their Louis Vuitton and Ann Taylor products, but want them at a fraction of the retail price. Her sales were up 17 percent in October.
In the suburbs of Dallas, Kay Smith still drives a black Lexus, but now passes by the high-end malls and heads to Wal-Mart.
“I think about everything I buy now,” Smith said.