There have been two views in the news media concerning the new frugality, the idea that we in the U.S. are spending less on personal stuff than we did before the recession.
- Those who say the recession has wrought a deep and permanent change in our spending habits, so that any adults alive today will remain frugal until they pass away.
- Those who say that profligate spending will replace this new frugality as soon as the economic hard times have ended.
The underlying premise, of course, is fallacious, to whit, that we are now frugal. Much of the decline in personal spending results from the increase in unemployment; in fact, an article by James Surowiecki in the most recent New Yorker says by that standard, maybe spending isn’t down as much as it should be. BTY, Surowiecki is in the “this soon shall pass” camp.
How can I make such a bold assertion when retail sales are down everywhere?
- Our six percent savings rate—up from spending more than we were making on an annual basis—is still laughably low compared to virtually all other developed countries. What we’re not saving, we’re spending!
- Our carbon print per capita is still much higher than any other developed nation.
- People are still gambling, and what can be less frugal than gambling?
- A majority of the country is still overweight or obese, suggesting people are still not frugal with their food budgets.
Yes, we’ve cut back, but just because you cut back, that doesn’t mean you’re frugal. For example, years ago, L.A. county asked residents to voluntarily cut back water consumption by 10%, so people began exchanging water bills for comparison. My uncle did this with one of his work associates and discovered that the guy’s son used about twice as much water as my uncle’s family of six. Even if this guy cut back 10%, I don’t think anyone would have said he was frugal with water.
My point is not to make an argument by anecdote, but instead to create an analogy to help explain why I don’t think our society has become frugal. When you net out the decrease in personal spending that stems from unemployment, the cutting back that people who have jobs and money are doing is not enough to accuse the U.S. of frugality. Not even close.
So what is the ideological subtext of debating if our nonexistent “new frugality” is temporary or permanent? I think that the idea is to support retail sales, since it makes us feel good to be frugal now and makes us feel that we don’t have to cut back anymore than we already have, which would further lower sales of discretionary products and services.
Now I’m not saying that there is a conspiracy, but rather a buzz that becomes a debate that is deemed newsworthy by key editors, all of whom share the same basic ideology and the same basic need for advertisers. Pundits and experts pick up the debate as it has been defined and decide to chime in. For a fuller explanation of the total process, I recommend William Domhoff’s The Powers That Be.