My column this week offers a skeptical take on the popular argument that the current recession has given birth to a new, more frugal American consumer. The argument isn’t so much about what consumers are doing now—everyone agrees that they’re cutting back, spending less, and saving more—so much as it is about why this is happening and about what will happen once the recession ends. The New Frugalists, as you might call them, argue that the shift in consumer behavior (which you can see here), reflects not just a rational reaction to job losses and a massive drop in wealth but rather indicates a fundamental shift in psychology, one that will endure long after the recession ends. Perhaps the most fervent and articulate proponet of this view is the Gluskin Sheff economist David Rosenberg, who argues that we’re witnessing a secular “shift from frivolity to frugality” and predicts a rise in the savings rate of ten to twelve per cent. (It’s currently around four per cent, up from zero per cent in the middle part of this decade.)

Since no one, obviously, can predict the future, this debate depends quite a bit on interpretations of the historical record, in a couple of senses. First, there’s a question of what constitutes a “normal” level of spending and saving. Just about everyone agrees that Americans aren’t going to go back to saving nothing. But are they going to go back to the savings rates that prevailed in the nineteen-seventies, when the rate was over ten per cent, or something closer to the five per cent rate that prevailed during the nineteen-nineties? Second, there’s the question of how serious downturns have affected consumer behavior—those who argue that this recession is going to remake the consumer often rely on analogies to the Great Depression, which in the popular imagination turned the freewheeling spenders of the Jazz Age into frugal, responsible adults.

On the first question, which I only touch on quickly in my column, there’s good reason to doubt that we’re going back to the nineteen-fifties (let alone the nineteen-seventies, which is when Americans saved the highest percentage of their income). While the decline in the savings rate and the growth in household indebtedness since 1980 has in part reflected a shift toward more consumption, conspicuous consumption in the classic sense has not been the biggest driver of declining savings. Instead, as this paper from economists at the Federal Reserve shows, the growth in indebtedness has largely been driven by demographic changes and housing prices.

Most interestingly, as Elizabeth Warren has argued, the idea that most Americans have been spending frivolously on consumer goods actually isn’t true. Instead, a hefty chunk of the increase in consumption in recent decades has been the result of higher housing prices, the rising cost of medical care, more spending on education, and childcare. A generation ago, Warren says, basics (housing costs, health insurance, transportation, education, and taxes) accounted for fifty-four per cent of the average family’s income. Today, they account for seventy-five per cent of it. Now, some of those costs arguably do reflect a lack of frugality—homes are more expensive in part because they’re so much bigger. But the fact that more than fifteen per cent of personal consumption expenditures now go to medical care, when in 1930 only three per cent of personal consumption did, isn’t a reflection of frivolity, and that’s not going to change any time soon. In fact, when you actually look at what Americans spend money on today versus what they spent it on fifty years ago, it’s striking that Americans today actually spend less of their income on goods—including everything from furniture to clothing to food to appliances—and much more of their income on services. For the savings rate to get back to ten to twelve per cent, in other words, will require a lot more than having people stop buying flat-screen televisions.

As far as the question of the Depression’s impact goes, it’s difficult to reconcile the idea that the Depression made Americans permanently frugal with the reality that, in the years after the Second World War, the U.S. saw an absolutely massive boom (see pp. 24-26) that was driven largely by consumer spending. According to one account, in fact, “nearly the entire increase in the gross national product in the mid-1950s was due to increased spending on consumer durables and residential construction.” And, as this historian argues, the nineteen-fifties was when American consumer society as we know it was born. It’s true, of course, that even as people were consuming, they were also saving (in contrast to the past few years), but that, again, was in large part because of demography, and because there were a lot of things (childcare, health care, and education) that they were spending significantly less on. The point, in any case, is that the Depression did not make people turn away from household consumption in any sense.

As I mention in the column, recessions (which usually entail a drop in consumer spending) often give rise to forecasts of a new consumer mentality. Here’s Fortune, from 1991, on “the death of conspicuous consumption,” and Time on Americans’ supposed embrace of “simpler pleasures and homier values.” What’s striking, really, is how similar the language in those articles is to the language people are using today.

It is true, of course, that Americans are in significantly worse financial shape than they were in 2001 or 1991, in the sense that they have far more debt than ever before. And given the massive destruction in household wealth, it would be very surprising (and not very beneficial) if we go back to saving nothing. But evidence for a substantive shift in consumption habits is pretty slight, as this article by economists at the Center for American Progress suggests. As they put it, “Consumers have not altered the share of their total disposable income that they are spending on most goods and services very drastically”—with the notable exceptions of cars and gasoline. Looking just at personal consumption data underestimates the decline in spending, since, as Michael Mandel of Business Week has pointed out, a sizeable chunk of so-called personal consumption actually doesn’t reflect individuals’ spending at all. But here’s historical data for retail and food sales (.xls). If you look at the adjusted numbers for this year and for 2007, almost the entire drop in retail sales is the result of the drop in auto sales. That doesn’t mean the drop isn’t meaningful, since autos are a massive driver of business in the U.S. But the numbers aren’t really what you’d expect if the American consumer had been genuinely reinvented.