The Great Recession that started in late 2007 turned the American shopper – famous for our free-spending ways – into the American scrimper, according to Consumer Reports.
Thanks to the downturn, we’ve been buying less of everything from housing to haircuts and driving our cars till they drop.
But after seven years of belt tightening, Americans are showing a new optimism. We’re ready to shop again. But we’re not the same old spendthrifts we used to be; this harrowing economic era has changed America’s buying habits, perhaps permanently.
These were among the findings of a groundbreaking study, done in June, by the Consumer Reports National Research Center. Here’s more detail:
• We’re buying back the American dream. The purchases that define American consumers more than any other? Our cars and our homes.
Car sales are skyrocketing today: Forty-six percent of people surveyed bought a new or used vehicle in the past year or intend to buy one in the coming year. Necessity is driving some sales. The average vehicle on the road is 11.4 years old, according to industry analyst IHS Automotive. (In cushier 2007, the typical car was 9.9 years old.)
Sales bottomed out in 2009, but now that the economy is in recovery mode, “people are focusing once again on trading in or trading up to a new vehicle,” says Steven Szakaly, chief economist for the National Automobile Dealers Association.
Real estate is picking up, too. The dire images of the recent past – block after suburban block plastered with for-sale signs and people paying on mortgages worth more than the homes themselves – are fading. Twelve percent of survey respondents said they’d bought a residence in the past year or plan to do so in the year ahead.
In 2013, existing home sales finally topped the 5 million mark, the first time since the downturn that sales reached levels set in 2007. Despite a slight dip in sales in 2014 because of higher interest rates, the National Association of Realtors’ chief economist, Lawrence Yun, expects a big rebound in 2015 (to 5.29 million).
• In: practicality. Out: indulgence. Moving beyond the biggest-ticket items, Consumer Reports found that Americans are spending their money very pragmatically. Almost half of respondents said that during the past few years they’ve been spending more on groceries; one-third are spending more on wellness products such as vitamins and moisturizers.
Consumers are also stretching their dollars by focusing on items the entire family can use, says Susan Viamari of global market research firm IRI – for example, buying a single bottle of shampoo that appeals to everyone rather than individual products for dry or colored hair.
Additionally, we’ve adopted other frugal habits. People are going longer than they used to between haircuts (41 percent), taking “staycations” rather than big trips (43 percent) and packing a brown-bag lunch instead of eating out (48 percent).
But we’re also giving ourselves more room for love. During 2013, American women gave birth to 3.94 million babies – a number that’s down 10 percent since the record-setting year of 2007.
Now it seems we’re ready to start procreating again. Twelve percent of survey respondents said they can finally afford to have children because their personal situation has improved. Twelve percent also said they were ready to marry – while 5 percent said they could now afford a divorce.
• The one thing we’d never, ever economize on. No matter how good we get at pinching pennies, there are still some things Americans hate to give up. Our caffeine habit, for instance.
“People aren’t trading down; they’re trading off,” says IRI’s Viamari. “There’s been a huge surge in gourmet bagged coffee sales.”
The survey found that Americans hold tightest to at-home entertainment: When asked, “What is the last thing you would cut back on in order to economize?” 38 percent said they’d never ditch pay television, including premium cable, satellite and streaming services like Netflix and Hulu.