From my perspective this recession was slow to take hold. As the markets began to implode my coworkers remained in a state of denial. As the pink slips began mounting and sales started falling the fervor grew. Companies in this recession acted swiftly. Corporate America was in front of the economic collapse, cutting spending and slashing headcount. Only after feeling the direct affects did consumers begin reacting.
Two years ago you were likely to hear someone brag about how much they spent on a new car or gadget and today they are more likely to brag about how much they saved. Frugal became the new fad. Budgets were reconsidered and every expense scrutinized.
The question has been asked, has this recession forever changed the American consumer?
For those that lived through the great depression the impact was life-long. Demographically speaking, the Depression era cohort, those born between 1912 and 1921 were in part forever shaped as people by their experience of the Great Depression, high unemployment and lack of security. They have spent their lives with a mindset of frugality.
This recession has certainly affected a significant portion of the population. Even the wealthy are scaling back according to a study by American Affluence Research Center report this year. Of the affluent surveyed, 9% will be spending nothing this holiday season, the remainder will likely decrease their holiday spending by 5%.
On the other hand, in a report released by Deloitte LLP, a survey they conducted revealed 51% of consumers polled said they “hope to spend at least as much as last year” this holiday season. Oddly they also had some conflicting information that people continue to hold back.
KPIX a CBS affiliate in San Francisco recently produced a report that cited, Kit Yarrow, a Golden Gate University Marketing expert that shared there is growing indication that while people express a continued desire to be frugal many are suffering from “frugal fatigue.”
Yesterday, the Bureau of Economic Analysis released its quarterly GDP report. Total gross domestic product (goods and services produced) rose by 3.5% in the third quarter. More interesting was data a little further into the report that reflected “Real personal consumption expenditures increased by 3.4%.”
Anecdotally, spend a little time in your local mall. The big holiday shopping spree has not hit but the halls are already filled. Consumers may not be buying as much, but it appears they are starting to buy.
Unlike the survivors of the Great Depression, it appears today’s society has not learned a lasting lesson from their conspicuous consumption ways. Frugality may be a passing fad.
Knowing that the economy is getting back on track, unemployment is beginning to stabilize and the credit freeze is beginning to thaw, are you thinking twice about your frugality? Are you ready to spend again?
Just one more question…
Fight back at frugal fatigue with these simple tips:
- Do You Really Need It? – Think about your desire to spend. Do you really need whatever you are considering? Can you live, eat, and work without it? We all want things but if your desires will not add value to your life, pass.
- Indulge Without Spending – Go to the library instead of the bookstore. Swap outfits with friends or neighbors so that you can wear new “to you” clothes. If you must have something “new” troll ebay and craig’s list to spend less on a like new item.
- Only Spend New Money – Challenge yourself to spend money only if you can generate extra income. Sell some old items on eBay, list your old books on Half.com, post your handmade items on Etsy.com or sell your skills to someone else part time.
- Divert Your Attention – Find a way to get your mind off your desires. Take a cold shower, go to the park, walk through a museum or watch a scary movie.
Share your methods, what techniques do you use to fight frugal fatigue?