Will recession yield a permanent cultural shift in spending habits?

Some experts say more consumers will spend more practically, buying smaller houses, eating out less and saving for big purchases

June 14, 2009|By Andrea K. Walker, TRIBUNE NEWSPAPERS

Myron Murray has exchanged nights sipping expensive cocktails in bars and restaurants for get-togethers with friends at home. He eats out less, saves more and thinks much harder about what he buys.

The 34-year-old manager of a Sam's Club in Annapolis, Md., isn't afraid of losing his job and hasn't seen a drop in his income. But the recession has prompted Murray to be more responsible about his money -- a change that could last a lifetime for him and other consumers.

"I think I need to plan a little better now for the future," Murray said. "The current economy caught a lot of people by surprise. If we build better habits now it won't shock a lot of people if [a downturn] happens again."

The past decade was one of splurging, as easy access to credit cards and home equity loans enabled Americans to live more lavishly than previous generations. But as the economy has come crashing down, some predict a permanent cultural shift in spending habits. Some anthropologists and economists say more consumers will be like Murray and spend more practically. They'll buy smaller houses, eat out less and save for big purchases.

Many consumers are being forced into these changes as they watch the value of their homes plummet or find themselves swimming in unmanageable debt. But for others it's a moral shift as they realize that all that buying doesn't add much to their lives.

"People are at that higher level where they're saying something is wrong with the way we're spending and it has got to change," said Robbie Blinkoff, co-founder and principal anthropologist at Context-Based Research Group. In conjunction with the Carton Donofrio Partners Inc. advertising and marketing firm, it recently surveyed people about the economy's impact on their spending.

The survey found that new "grounded" consumers are emerging. These consumers are realizing that life is not defined by what they buy and that credit isn't a true measure of their financial worth. And they're learning to live within their means.

The economy has taught Chung Yi that he can live comfortably on a salary of less than six figures.

He left high-paying jobs and started a green contracting and design company in Baltimore. With a smaller salary, Yi, 27, has cut back on spending. He spends a quarter of what he once did on clothes and buys furniture at the Restoration Hardware outlet, rather than the company's full-price store.

Yi has come to appreciate the more frugal lifestyle. "It's going to have to be a new way of life," he said. This isn't the nation's first recession, and in the past, people have gone back to their spending patterns once the financial environment improved. Blinkoff believes that this recession -- longer-lasting and deeper than others -- will have a greater impact. Behavioral changes take time, and this recession will provide that time, he said.

He cautions that people aren't going to become cheap -- they'll just look more closely at their spending choices.But not everyone agrees the spending shift will be permanent.

Sara Raley, an assistant professor of sociology at McDaniel College in Westminster, Md., with a specialty in consumerism, said shopping is too big a part of people's lifestyles to be drastically changed. She recently asked her students to name things they couldn't live without and many listed cell phones, high-speed Internet and multiple televisions.

She also said television, movies and other entertainment media promote luxury living too much.

"I don't think we'll see permanent change unless we see some large structural change in the way we idolize consuming," Raley said.

Jean Johnson, 46, an event planner who lives in Suitland, Md., is being a little more cautious with spending but doesn't plan to abandon her shopping habits anytime soon -- especially her shoe habit.

"There are still going to be plenty of people out there who shop," she said.