America's more frugal, but will it last?
There's no question Americans are becoming more frugal. Half of them are cutting back on leisure activities and buying clothes, according to a soon-to-be-released survey from First Command Financial Services in Fort Worth, Texas. Nearly the same percentage are shopping discount stores and increasing coupon use.
So will the Great Recession permanently change spending habits the way that the Great Depression and World War II did for previous generations?
"Depending on the duration of this crisis, a new sense of frugal living might well emerge among younger and older Americans," writes Glen Elder, author of "Children of the Great Depression," in an e-mail.
Already, some Americans say they are permanently changing their habits, according to the unreleased First Command Financial Behaviors Index. The percentage of Americans who say they have cut back for good has risen from 14 percent in February to 23 percent in June. Some 57 percent said the recession would have a long-term effect on their spending behavior; 48 percent agreed that they have "embraced frugality as a way of life."
About a quarter of US consumers are already "true frugals," says Aaron Reid, chief behavioral scientist at Sentient Decision Science, which conducts the monthly survey of 1,000 Americans for First Command Financial Services. Another quarter are "foul-weather frugals," who will go back to their old spending patterns once the economy recovers. Another 20 percent are free spirits, who think living paycheck to paycheck is perfectly acceptable.