Bankruptcy

New Book, Credit Numbers Celebrate Cheap Americans

By ckramer

Not too long ago, spending on credit was in, especially in the United States. But, since the global economic recession has humbled a lot of us financially, it looks as though thriftiness is making a comeback.

Exhibit A: In Cheap We Trust

Journalist Lauren Weber recently published a book about the ?cheapskate? roots of contemporary Americans. In her research, she found that frugality was one of the principles on which the country was founded:

• Using less meant buying less ? generally from England and other established countries that we, as a nation, wanted to be independent from.
• Working hard meant expanding the businesses and farms we owned, which would lead to hiring more Americans and expanding the nation?s workforce.

Weber also highlights how and why cheapness became passé ? with the introduction of credit cards and easy credit in the 1950s, people were all too ready to adopt the not-so-thrifty way of life plastic allowed them. And so it became hip to spend.

The Verdict: Take advantage of the trend of cheapness to whip your personal finances into shape. And you might want to check out her new book (from the library, of course).

Exhibit B: Consumer Credit Drops in July

July marked the sixth straight month in which Americans cut back on consumer borrowing, according to the Federal Reserve. In fact, American consumers cut back by 21.6 billion dollars ? significantly more than the approximately 4.5 billion dollars expected by many economists.

Here?s a breakdown of the important numbers:

• Monthly decrease in borrowing: 21.6 billion dollars.
• Decrease from June: 10.4 percent; this drop was the largest since a 16.3 percent decline in June of 1975.
• Decrease in revolving credit: 8.0 percent.
• Decrease in non-revolving credit: 11.7 percent
• Total current consumer credit: 2.47 trillion dollars (in the third quarter of 2008, before the stock market plummeted, total borrowing was close to 2.58 trillion dollars).

Even with the assistance of Cash for Clunkers and the predictions of many economists that the recession is coming to an end, American consumers are speaking clearly with their wallets. While some trends end before you?ve even had a chance to see what they?re all about, it looks like American frugality is here to stay ? at least for a little bit longer.

Additional Resources
Federal Reserve: Consumer Credit Statistical Release, July 2009 (PDF)

Full post as published by The Bankruptcy Blog on September 11, 2009 (boomark / email).