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How long will the 'new frugality' last?

Americans won't give up their spendthrift ways forever.

By Donna_Freedman Nov 2, 2009 2:42AM

Gas is expensive and food is going higher and higher. I'm not talking about today -- I'm flashing back to my teenage years. Times were tight between 1974 and 1976, when I ran the household for my father and younger brother. I remember how quickly the grocery money evaporated even though I made all our meals, desserts and snacks from scratch. Gasoline was not only costly but rationed during what was widely referred to as the "energy crisis." 

People combined errands and stayed home a lot more. They cut back on nonessential foodstuffs, did without entertainment and new clothes, and generally tried to make their dollars go further. But this austerity didn't last. The age of conspicuous consumption cranked up in the 1980s, and cars seemed to get bigger each year. More than a few times I've said to myself, or to others, "Have we learned nothing from the '70s?" 

Nope, we hadn't. The crisis was over. We had plenty of gas once more. 

But now fuel is pricey again and food costs are getting scary. Suddenly people are combining errands, cutting back on nonessential foodstuffs, doing without entertainment and generally trying to make their dollars go further.

As Mark Twain put it, history doesn't repeat itself but it does rhyme.

Second verse, same as the first
The Associated Press recently ran an article  titled, "Consumers make changes -- but will they last?" It reported what most of us already know: People are having to spend more these days on the absolute essentials. It's not surprising that sales of store-brand products have gone up 9.1% in the past year. 

Some folks are really hurting. They can't feed and clothe their kids properly. They're going without even the most basic health care. They're losing vehicles, or homes, because they can't pay the freight. They're existing on the margins.

Others are keeping the books balanced, but only just. If gas or food keep going up they'll have to find the money; how, they're not sure. They worry about the future. 

And some are merely inconvenienced. They're cutting back -- vacations nixed in favor of "staycations," fewer shopping trips, less organic food -- but they're nowhere close to starving. They're just grumpy.

For all three groups, having to spend more for groceries and gasoline has meant less money for clothes, home improvement and entertainment. Businesses are feeling the pinch and, the article notes, "are trying to figure out which habits shoppers will keep and which they will drop when the economy recovers." Will consumers keep going to thrift stores and eating at places that offer buy-one-get-one coupons? 

My sources say "no." I'm betting that a whole bunch of people will go right back to their spendy ways, just as they did after the 1970s energy crisis. We didn't learn a thing back then, and I'm betting we won't learn this time, either. 

Or consider a more recent example: According to the AP article, the recession of the early 1990s made affluent shoppers check out cheaper alternatives. I remember reading about the smart set slumming at discount and dollar stores. Those were also the days when Amy Dacyczyn couldn't crank out her "Tightwad Gazette" newsletter fast enough.

But this new frugality didn't last. When times got better, dollars bled from wallets once more. We learned nothing that time, either.

A little bit louder and a little bit worse
Maybe it will be different this time. Maybe people who have learned the joys of being debt-free will decide to stay that way. On a Smart Spending message board thread, a reader posting as "ss18612" notes that thanks to frugality she no longer dreads the arrival of the daily mail: "Bills are paid the day they arrive and an unexpected expense is not a major problem. It takes planning, perseverance and sacrifice, but it's oh so worth it!"

I don't think this is a majority attitude. Americans have short memories and long shopping lists. As soon as things improve even a little, I bet the malls will be crowded once more. 

And if things don't improve fast enough? There's always credit, which even people with questionable financial histories can get (albeit at usurious rates). Why should we have to cut back on Christmas shopping, or live without game systems and big-screen televisions just because times are tough?

If I sound pessimistic, it's because I am. I'm tired of the sound of history continuing to rhyme.


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