Can Americans Really Stop Spending?

>> Spending is out, saving is in. But is frugality just this year's dietary fad? Or have we, like the generation that grew up in the Great Depression, been truly altered by economic trauma? The answer seems to be yes, we probably have. For one thing, we're likely to be better financial citizens, at least for a while now. Top investor, Jeremy Grantham, foresees seven lean years of frugality and debt repayment for the U.S. consumer. The real test will come when the markets start to rebound, since in the past, we've tended to spend more when our assets went up. Maybe this time we won't trust that paper wealth quite as much. Another change, we'll borrow a lot less. The Great Depression gave borrowing to speculate in stocks a bad name. From now on, we'll consider it erratic and irresponsible to do the same in real estate. A third change, we'll redefine our concept of wealth. These days, making $250,000 a year is defined by the White House as wealthy. And the previously unimaginable concept of a trillion dollars gets thrown around casually. Better to define wealthy for yourself by delineating your life goals, whether it's sailing around the world in your 40s or starting a small cupcake business in your 60s and then saving enough to reach it. Finally, we may lose our taste for risk. Our favorite card game during the bubble was Texas Hold'em Poker, a gambling game played for money in front of TV cameras. The favorite during the Great Depression was Bridge. A Bridge would signal a psychological change that exalts subtlety over flash and team play over a winner-take-all approach. It just might be we've had quite enough of that.

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