Tuesday, November 18, 2008

Thrift Will Build Healthier Economy In Long Run - tbo.com

Published: November 17, 2008

The holiday shopping purists among us don't even want to talk about the retail season ahead until the day after Thanksgiving. But with the economy looking bleaker by the day and stock indexes slumping from bad news on sales, all eyes are on holiday projections and that nebulous thing called "consumer confidence."

No one expects this year's Black Friday - the day after Thanksgiving when the retail industry's ledgers start to go from being in the red to in the black - to put many of the nation's top retailers in the profit zones. Wal-Mart, the world's largest retailer, is optimistic because it expects some consumers who might have gone to pricier stores to seek their bargains. Other retailers, like Best Buy, however, have a dim outlook.

So what's a shopper to do when everyone - including Wall Street traders - is waiting with bated breath for you to whip out your credit cards and start spending? With most of us seeing housing values decline, retirement savings taking a hit and fearful of being laid off, running up a big credit card bill seems foolhardy.

Yet if consumers don't spend this holiday season, some economic experts fear the recession is going to get worse.

Where's George Bush when you need him to tell you to go out and shop?

The sad fact is that even what seems like a slight downturn in consumer spending can spell disaster in this fragile economy. According to the E-Tailing Group, Americans on average this year will buy 11 to 15 gifts rather than 16-plus gifts predicted last year. But one less gift multiplied by tens of millions of shoppers is a very big deal.

So consider this before you go and run up your credit cards in the name of saving the economy: While Americans showing new-found thriftiness may cause short-term pain, being able to resist the shopping spree is good for the economy's long-term health.

Last month, Fortune magazine reported that Americans are saving their money instead of going deeper into debt, reversing a decades-long trend of spending more than we make. The personal savings rate, which measures the amount of disposable income that isn't spent, increased by almost 3 percent in the second quarter of 2008 after being below 1 percent for almost four years.

Saving more is good over the long haul because domestic savings create sources of money that banks use to make loans to companies borrowing for new plants and equipment - which translates to job creation.

And while most of us probably don't need another flat-screen television set or another sweater under the tree, what this nation definitely needs is jobs.

So shoppers, hunt for the sales and seek out those bargains. Spend, but not more than you can afford.

And if you've got a little extra money because you've been pinching pennies, pick up a few items to donate to your local charity, toy drive or food bank. That's a double-dose of good will, putting money into the economy and some good holiday cheer for a neighbor who is worse off than you.

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