A tough economy toughens up America

“No pain, no gain” is the exercise motto. It might also apply in some ways to economic health. For as this difficult economy grinds on, the pounding is reshaping important players, strengthening them for the long run.

Leading the way are America’s consumers, whose spending beyond their means contributed greatly to the nation’s financial crisis of 2008 and 2009.

Consumers have tightened their belts several notches by lowering debt and increasing savings.

The average individual credit-card balance – just under $5,000 – is at an eight-year low and delinquencies have tumbled, according to a report this week by consumer-credit rater TransUnion.

At the same time, people are also saving more, putting away 6.4 percent of their after-tax income in June, compared with a consistent savings rate of merely 1 to 2 percent before the Great Recession.

The changed spending habits are real. About two-thirds of those who tell the Gallup poll they’re spending less say it’s because this is their new normal spending level, according to Gallup chief economist Dennis Jacobe.

While consumer reluctance to spend hurts retailers in the short run, it shores up household balance sheets for more reasonable spending later and puts a future economy at less risk of collapse.

Tight budgets have also put state governments on a diet – not just with temporary cutbacks but with longer lasting, much-needed changes. For instance, several of them are attacking bloated public-employee pension plans and overpopulated prisons.

In the Great Recession, federal spending grew rapidly to boost the economy and bail out big, failed companies. Washington must soon commence leveling the nation’s mountain of debt.

Regardless of how one may judge the various reforms of this administration, though, the White House and Congress deserve credit for at least tackling difficult and burdensome problems: expensive health care, lax financial oversight, and underperforming schools. It’s not yet known whether the nation will emerge stronger for such efforts.

As for business, many large companies are in good shape, possessing strong balance sheets. Some industries, such as automobiles and the media, have gone through wrenching change. Some new sectors, such as everything related to “going green,” are taking root.

Economists emphasize that consumers can’t be – and shouldn’t be – counted on to lead the way to a strong recovery. Rather, the country should build stronger exports of goods and services, with potential in emerging markets such as Brazil and Russia.

But the United States has yet to make the transition to greater reliance on exports, in part because of a business mind-set that is in many ways still focused on the US consumer model.

Necessity forces inventiveness. America’s economic troubles have forced necessary changes that will leave the country stronger in the future. But the workout is not over yet.