Thrift Economy: Spending only down to 2005 levels. Is that truly a shift?

091012_r18912_p233James Surowiecki writes in this week’s New Yorker.

“As people try to rebuild their nest eggs, the savings rate is bound to remain higher than it was a few years ago. And what we spend our money on will change, too; housing costs, which were the central cause of the rise in Americans’ indebtedness in recent years, should eat up less of our budgets in the future. But the evidence for a radical shift in the way we consume seems more like the product of wishful thinking (there’s a palpable longing among pundits for Americans to become more frugal) than anything else. In many categories, spending has dropped only slightly, if at all. And, while these are very tough times for retailers who believed that spending could only go up, retail sales rose briskly in August. Before we go proclaiming this the age of the American tightwad, a little perspective is in order. Even after the worst recession of the past seventy years, retail sales this year will be about where they were in 2005. Does anyone really think that four years ago Americans were misers?”

I agree with Ed Cotton who notes: “this is not a binary equation, some people will have to become more frugal, others with more confidence and means will certainly get back to spending. The challenge is to understand who these different groups are.”