In tough times, US consumers forging new behaviors

In tough times, US consumers forging new behaviors February 5, 2009

Posted by BDO in News.
Tags: beating, consumerism, Debt, economics, education, finance, nonprofit
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Consumer behavior in America appears headed toward a new normal that includes less household debt, more saving, and cooler expectations about home prices in the future.

“It’s helping to repair the balance sheet, which is all to the good. It creates a stronger potential for consumer spending down the road,” says Ken Mayland, president of ClearView Economics near Cleveland. “We are going to see a new consumer emerge from this rubble.”

For much of this decade, many Americans lived beyond the means of their regular income, tapping cheap credit and the rising value of their homes for extra cash. For a time, the savings rate fell to zero.

Now Mr. Mayland figures that cooler demand for credit “will persist for a good long while,” and the savings rate will rise. He doesn’t expect it will match the levels of 8 to 10 percent of disposable income that were common before the 1990s, but in December Americans saved 3.6 percent of their income.

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