Americans are spending again—whether they can afford to or not. So much for the ‘New Austerity.’
Old habits die hard. It was only last year that shell-shocked consumers were pledging their allegiance to the “New Frugality.” Chastened by the brutal lessons of the worst economic downturn in decades, Americans swore off conspicuous consumption and resolved to embrace the thrifty ways of their grandparents who lived through the Great Depression. But as any dieter can tell you, resolutions are made to be broken.
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. 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.
