Newly Frugal Behavior Is Permanent, Say Some Consumers
A new study says that 26% of US consumers "have no plans to return to their free-spending ways," which probably doesn't sound like good news to retailers. Even worse (for retailers), about a third say they've become less loyal.
Of course, what you plan on doing and what you end up doing may change quite a bit if there's enough marketing aimed at you, and this sounds a lot like shoppers throwing down the gauntlet to retailers.
"Many U.S. consumers turn permanently tight-fisted: survey" [Reuters]
(Photo: Lee Nachtigal)
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"A new study says that 26% of US consumers "have no plans to return to their free-spending ways..."
...until credit cards and loans are once again super easy to come by. Most people don't become frugal by choice, they become frugal because it's the only way for them to get by.
I don't think "permanent" can be taken too seriously in this context. How many people, the morning after getting hammered, say they're never going to drink that much again, and they do it anyway...
We can only hope. It would probably mean longer recession-like symptoms, but on the whole, I think the national economy would be on much more stable footing in the long term if people continued to be more responsible with their money.
why less loyalty? I'm more loyal to the companies that have always treated me right - even when they were not desperate for cash. The companies that "suddenly" became nice and accomodating - since they now have to "earn" our business - I dont feel for so much.
oh - and Americans not going back to normal? I dont buy it.
Is this being positioned as a bad thing? I for one am pretty happy about it. It is nice to see an entire culture of people changing to a more responsible form of behavior.
What? Not spend? Why, that's un-American! Don't you know the well being of the world depends on YOUR profligate behavior? If you don't spend like there's no tomorrow, the world will end in 2012!
Uh...
@MartaMyrrha: I think it's referring more to people going with lower-cost products rather than the more expensive brand-names they had previously been using..
Did you ever meet someone that lived during the great depression? Many of them are very frugal. They got hurt badly enough that they never, ever, forgot the lesson, even after it no longer applied to them.
This economic event is the second only to the great depression which, if you use unadjusted unemployment as a guide, were 3/5 of the way to.
@MartaMyrrha:
I imagine that consumers are telling them that cost is now important than past habits. Someone that gives up that $2.00/day starbucks coffee isn't loyal to starbucks any more.
...until the new MUST HAVE 3D LCD TVs come out - then all bets are off!
@jblack: And generic and store brands over brand-names. I bought a store-brand can of bean dip last week for $.59. A can of Frito Lay bean dip of the same size was $2.19.
Now that many of us know what it's like to be laid off when it seemed IMPOSSIBLE to those of us who work hard and had bosses that were very happy with our work and appreciated us, I prefer the satisfaction of no debt to buying a bunch of crap. I still like to shop but am far more selective than before, and savings are now imperative to me.
@Paladin_11: Investment is like spending, but without the product, and you get more money back. Americans used to get behind that initiative.
@dragonfire81: I was uber frugal in my years as a starving student, starving artist. I went back to many of my old habits. What I have seen in the last maybe 5-6 years is that the entire system is a complete ruse, there is no job security and we are way too much at the mercy of big companies and employers whims. Our infrastructure is also really unreliable and that has been proven in that same time frame. Gas prices are unstable and where I live there is no alternate transportation. I can't even catch a train to get out of town.
Too many past assumptions I had about the country, economy and my own financial situation have been proven false. I'm not going back. This isn't a matter of temporary belt tightening. Maybe it helps that my parents grew up in the great depression?
@Paladin_11: I was in Mexico last week and two seperate street vendors urged me, "Buy some stuff you don't need!" I told them "But I'm not a typical American!" but I don't think they got it... or cared. Can't blame them for wanting my money but I'm super selective nowadays.
Oh please. Wait until there's another bubble and all everyone repeats the same mistakes they made this time. Do people think this is the first recession?
I just got out of college and snagged a 46K a year IT job starting Monday. I'd say my frugal ways might just shift a little freeward myself.
Yeah! Just like how we now have a permanent Democratic majority. And if Washington DC gets a representative, it's seriously game over forever.
Oh and how in 2007 finance had solved the problem of housing busts. We were in a permanent economic boom back then, you know, just as we were during the the permanent economic boom in the 90s.
And how by 2042, we'll have a hispanic majority in America. Cause nothing between now and then will slow the influx. Nothing!
*sigh* Why is so much attention paid to such short-sighted future predictions?
@Paladin_11: If the entire world's economic survival depends on people in the US foolishly spending themselves into the poor house on crap like Snuggies for their dogs the system is done for.
Companies would never base their business models on ever increased spending, oh wait.
@dragonfire81: Not true of everyone. I have a very high FICO score, lots of credit cards and no credit card debt. My frugality has nothing to do with my available credit - I have lots of it. I've just learned that there is great freedom in having no debt since paying it all off last year.
Yeeeeahhh sounds just like all those times I (honestly and sincerely) swore that I will procrastinate less next time, and that I'll start my assignments sooner, and that I'll start preparing sooner for the next mid term.
Does. Not. Happen.
Sure, there will be a certain % who do not go back to buying stuff willy nilly. Good for them. Most of them however will go back to buying stuff, but they will be less likely to overspend or buy excessive crap they do not need. Some others however will just return to their old ways as soon as they are out of this particular hole.
However, I think the biggest permanent effect will be felt on those who just were entering the real world as the crisis was taking over. They are more likely to be more circumspect with their spending long into the future. Especially if they saw what happened to the near-retirees who now cannot retire.
Others... unless their portfolios were permanently damaged, they will slowly drift to their old ways.
@diasdiem: Especially with all the shrink-ray action going on by the major brands.
The public at large has noticed their short-sighted pocket lining adventures.
@pb5000: Yes, but such a large part of our economy is now based on our irresponsible ways, that it will have a short term impact on our economy. Long term (if people keep it up), I think it will help. The problem is that it probably won't last long term.
Nowadays its a matter of pride to say you have no debt. I don't think that will change for a dozen or so years, I hope not anyway!
@Michael Belisle: Are you making a prediction that we'll continue to pay attention to short-sighted future predictions?
@MostlyHarmless: Don't knock procrastination. Procrastinators are more responsible. We get nothing done right away at the start and then get our work done. People who get to work right away often don't get any nothing done at all, they just move straight on to the next project after the finish their current one and leave all that nothing-to-do undone. Shameful.
sweet,
Cheaper stuff for the rest of us!
@diasdiem: For a moment, i was like "what the hell is wrong with this guys grammar" ... and then i burst out laughing.
@Applekid: You'll know if the shrink ray is getting out of hand when this year at Thanksgiving and Christmas Butterball tries to pass off chickens as turkeys.
@Applekid: With people not buying, companies aren't making as much money, they have to lay people off, so now they have less money to spend, so one and so forth. But once everyone gets over this initial kick in the balls, and build up a cushion again, they'll get more comfortable spending again.
I would expect many to restrain spending for a while, once things get better and the sentiment of prosperity is in the air, most will likely return to their old habits, its just a matter of time, fundamental character change doesn't happen unless someone consciously makes that choice, instead of having the economy make it for them.
@Applekid: I suppose I am. Short-sighted might not be the right word.. "Stupid" might is better. Or perhaps "narrow-minded", if you want to be polite.
Speaking of which, Bad Predictions by Laura Lee looks like an entertaining book. I like this one:
Before man reaches the moon, your mail will be delivered within hours from New York to Austrailia by guided missiled. We stand on the threshold of rocket mail.
Arthur Summerfield, U.S. Postmaster General under Eisenhower in 1959
@MartaMyrrha: Anecdotal confirmation here. Raises haven't kept up with expenses, and even though my salary has gone up, my actual standard of living has decreased since 2001. So now we're taking a more aggressive approach to cost cutting.
For instance, with food: no more brand names, period. So far in the last three weeks we've tried generics for everything, and liked them just fine. In fact, we don't even shop at the big premium grocers anymore... Food4Less (part of Krogers) and Aldi.
Here's the kicker... since now we're happy with the food quality of the generics, what reason would we have to go back to premium brands if / when our real income increases? Even if they offer 20 or 30 cent coupons as a lure, I'm still saving nearly 50% buying generic without a coupon or a store loyalty card.
It's going to be dark days for retail soon.
@Applekid: Exactly and it's more than just that for me. Companies that historically had a good product - who now have shipped production overseas to a bargain basement factory to line their pockets - have lost my business. I don't care if it says Samsonite or Crapsonite, if it's all made in the same place and the one is charging $200 more is it any wonder I'll buy the cheaper.
For me loyalty isn't just falling so I can save a buck on one trip to the store. Loyalty is falling so I can save many times over by buying products that last.
@jblack: A *third* of the country was out of work. A third of the people who weren't out of work lived like, well, people in the 1930s lived. The poor and lower middle class turned into migrant workers.
It's a bad economy. It ain't the Great Depression, not even close.
So now it makes more sense than ever to buy quality products that will last, not because they're on sale at Mall Wart.
Well, sorry to sound pessimistic about this, but that's about silly sounding. Remember the people that were burning their SUVs as they couldn't pay for gas? Then once the fuel price dropped back to half of what it was, what happened? Over half of the people that were upset with their gas-gusslers went right back to a inefficient vehicle. I've come to the belief that over 75% of us Americans have the memory and attention span of a canary. I've scrimped and saved for 20 years now to buy a house, and I plan on putting down a 50% to 75% down payment on the house when I find it, not relying on my credit to back me and never gamble on what the market may do. I think that if more of us would be self reliant and never buy what we can't pay for in CASH, we could bail this country out quicker. (and my credit is over the 800 mark by doing this)
@jblack: While I see your point, those are also, for the most part, people who grew up in that environment. Most people who were adults in that time period are dead. Changing behavior is a lot different from learning it as a child.
I'm at such a weird point in my life with this recession - I graduated from college in 2007 and have worked (hard) since then for more money than I've made in my life, even when times were great (because I was in school and working part time)
I've lived frugally while in high school and college and even now to some degree, but I can finally afford the nice, beautiful, quality items that I've always wanted (a $200 watch, for example). To be fair, I saved up and researched, it - it wasn't an impulse buy, but it seems while the rest of the world is hoarding their pennies and shopping at Wal-Mart, I finally have the budget to buy nice things and I'm enjoying it.
Is that bad of me?
If for whatever reason I suddenly found my financial situation greatly improved, I'd probably loosen up a little bit, because frugality can feel oppressive at times. But I'd never go back to spending money left and right. I'll continue to know exactly what I'm doing with my money and where it's going.