A couple of years ago, N.C. State University economist Mike Walden said the recession we were experiencing was going to change consumer habits: out would be the heavy borrowing and spending, and in would be saving and frugality. Was he right?
“I have to say, unfortunately, I think so. All of the evidence shows that consumers are saving more money. They are paying down on debt. And they’re being much more frugal shoppers. And … indeed if you look at surveys of consumers, not only do they say this, but they give us some insight into why they’re doing this, and they’re very cognizant of the fact that they’ve lost wealth, both in the stock market, for example, for those who have stocks, as well as in their house.
“They’re very cognizant that the economy continues to be challenged. So even if they have a job, they’re … very worrisome that they might not keep those jobs. And what they are doing is they are doing things simple things like eating in more rather than going out to restaurants. Instead of going on … types of entertainment that use more money, they’re spending more time at home with their family and are entertaining themselves that way.
“And also they’re telling surveyors that rather than spending impulsively — that is to say, they see something, they like it, they buy it — they’re … not doing that, and they are planning their spending. They are taking time to think about exactly what they need and what they can afford.
“So, I do think … that there’s been not only an economic change in how people are approaching spending in the economy, but there’s been a psychological change about how people view spending in total.”