"Old habits die hard," says Stefan Theil at Newsweek. American consumers shellacked by the recession solemnly pledged allegiance to the "New Frugality" last year, resolving to "embrace the thrifty ways of their grandparents who lived through the Great Depression." But that level-headed resolution to save more and buy less has been trumped by the fact that Americans are "hard-wired to buy stuff," and we're beginning to set tills ringing in record numbers yet again. This "urge to splurge," says Theil, may not be good for the long-term health of the economy. Here's an excerpt:
Even as Americans are still struggling to meet mortgage payments, pay off credit cards, and replenish savings, they’re also starting to spend again—whether they have the money or not. Last week, fresh numbers showed household spending rising for the fifth month in a row and consumer confidence reaching its highest level since June... If you factor out spending on cars, which is still 18 percent below its 2005 peak, Americans’ total spending on goods and services has now passed pre-crisis highs....
The truth is that spending may be hard to contain. Entire generations of consumers have grown up with the idea of instant gratification and the credit culture that comes with it. Ever since Henry Ford popularized the installment loan to sell his newly mass-produced cars, the idea of saving to buy something has nearly disappeared from the American financial vocabulary.
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