OK. So we're officially in a recession. As far as I can tell, this is news to exactly nobody. I personally am very lucky to have been very insulated so far--my focus on frugality of late is based on my own stupid debt, not on any reduction in my salary or job-related hardship (though, of course, higher prices do change things a bit for me, just like anyone). However, even I am aware of an increase in hardship around me.
However, I saw something today that really drove it home. According to a survey done by the American Research Group, the average American family plans to spend $431 on gifts this Christmas. That's a 50% reduction from last year, when the average was $859. And even last year's average was a reduction from the years before that, as every year from 1998-2006 averaged over $900 and as much as $1,052 in 2001.
What does this mean, besides fewer gifts and disappointed retailers? What it implies to me is folks either not having or not being willing to use consumer credit. Most of those middle class big spenders in years past had to have been putting some of that grand they spent in December on plastic, right? I mean, it's not like saving for Christmas gifts is the American way. So why not just do that again this year? Could it be that people are still paying interest on the $859 from last year? It's hard for me to believe that we've really collectively seen the error of our ways, so there has to be a more basic reason.
Since I've started using mint.com (and a huge thank you to whomever recommended it to me in the comments here--I love it), one thing I've been really interested in is the feature that compares Mark's and my spending to the "average" American family's spending. Surprisingly, in most categories, we're below average. Our mortgage, car payment, fuel, utilities, and entertainment spending are all well below average. Our food spending is slightly higher than average, but not substantially. The only place where we spend substantially more than the average family is, unsurprisingly, pets.
Our collective income is not substantially below average. And we feel like we're barely able to keep up with our bills. So how are all of those people who spend more than we do and make less doing it? And with added child care costs we don't have? The answer has to be credit, right?
So where does it end? How much is this trend towards frugality (and even new "hipness" of frugality) really making a difference? Are those who are making inroads towards spending within their means still a fringe group? I think it's too early to tell, but knowing that people are planning on a 50% reduction in their Christmas spending certainly implies that's the case.