This commentary aired recently on the PBS program Nightly Business Report.
Most Americans probably think they're pretty frugal. But we're not. We buy bigger homes and cars than we need, we run the air conditioning when we're not even home, and when we need to boost our spirits, we go shopping.
But now that's ending. Soaring energy costs, a housing meltdown, and a lame economy are reining in our overspending. It's called the New Frugality. Just like the Old Frugality, back in the days when Ozzie and Harriett were a model family and Americans had never heard of a latte. Back then, they didn't have Everyday Luxuries like Tuscan bread and high-thread-count sheets. Most people only had a couple pairs of shoes. It was a treat to go out for dinner once a month.
Consumer spending accounted for less than 60 percent of GDP in the 1950s. Today it's about 70 percent. So we still need to give up a lot of things we've grown entitled to over the last 50 years. We've started by getting rid of big SUVs and buying more stuff at Wal-Mart. So what else are we going to give up? Flat-screen TVs? The iPhone?
I also wonder what will fuel our optimism. Ozzie and Harriett might seem frugal to us, but they didn't know they were frugal. In fact, after the privations of a Great Depression and wartime rationing, they probably felt that a house filled with matching furniture was downright extravagant. That kept their spirits high. They spent more.
Giving stuff up, on the other hand, makes us feel bummed out. If we don't have retail therapy, how will we make ourselves feel better? Go bowling? Get to know our neighbors better? Maybe you and I really will discard two generations of acquired habits, and discover our inner spendthrift. But if the New Frugality holds, it might be a good time to invest in a psychotherapy franchise.