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In tough times, US consumers forging new behaviors

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For now, though, the economy is feeling the shock as consumers transition from old behaviors to new ones.

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.

Beth Byrne is one face of the new economy of 2009.

With interest rates now historically low, the Boston-area resident was recently able to refinance the mortgage on the home where she’s raising her two children. But she figures the wise thing is not to spend much, if any, of the roughly $200 a month that stays in her bank account as a result.

“I don’t think it’s going to go toward buying new things,” she says.

She’s not the only one thinking that way. In the final quarter of 2008, the savings rate reached its highest level since 2002, according to numbers the Commerce Department released Friday. As Americans held onto more of their income, consumer spending fell at a 3.5 percent annual pace, accounting for much of a 3.8 percent annualized dive in gross domestic product (GDP).

The shift appears tied to expectations that the economy won’t return to roaring growth in the near term. In a late-January Diageo/Hotline poll, 43 percent of Americans said they expect it will take two to four years “before the economy comes out of recession and is back on track.” Among the other respondents, as many said it will take even longer than that as said the time will be shorter.

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