It's a fashionable argument to make these days, especially by market naysayers: the average American consumer, feeling the anxiety of a growing recession, will continue to pull back on spending throughout 2009, resulting in yet another blow to the fragile U.S. economy. It's a theme that has picked up momentum in the popular media, with a raft of current articles declaring that frugality is now "in" while mass consumerism is now "out." But has the U.S. consumer really tipped from a "spending" mindset to a "savings" mindset?

That's the provocative question asked by Stephanie Fitch of Forbes, who raises the question of the U.S. savings bugbear. As Stephanie points out, there's actually very little empirical evidence to suggest that the savings rate will push much past 4-5%, despite dire predictions to the contrary. During typical recessions, consumers increase their savings by only about 2%. Moreover, most economists point out that savings rates don't typically rise if interest rates are falling -- anybody recently check out what the typical savings account is yielding these days?

What do you think: Will the U.S. consumer pick up the spending slack and lift the economy out of recession in 2009?

[image: Piggy Bank by annia316 on Flickr]

People will spend the same amount of money just on less things, or buy the same amount of things, but of lesser quality. (WMT and the like should be looking good for 2Q results I'm guessing)

In reality, people spend what they make on one thing or another anyway, so unless net incomes increase, spending or saving will not really increase much if any. People have been tightening there belts since gas went up to $4 and above and this recession while generating an increase in lost jobs, has not really had much affect on how much working people spend.

I would actually think savings would go down when times are tough, at least for Joe Public. Perhaps the more affluent people save more in times like these, but my guess is they spend what they make just like everyone else.

The US consumer cannot pick up the spending slack right now, due to a lot of unemployment, a general deleveraging of the general economy, and yes, a little bit of fear.

Consumers are like locust when they hit the market they will do what is needed to raise us up & out. They are only resting in the fields. they will only rest for so long before they get hungry. Unemployment or not they will feed you forget where you live this is USA the land of hunger for what (I WANT). You cannot stop it only stand a side. Keep short selling the market I love to watch a good feeding frenzy, as always.