WASHINGTON ? The ongoing recession has caused a shift in the consumer culture, converting spenders into savers, with a growing number of people establishing emergency funds and adding to their retirement and savings accounts, The Washington Post reports.
As many took their first savings plunge by trimming holiday spending, many others are seeking more substantial ideas on how to sustain their frugality, calling on financial planners to guide them into savings strategies.
"Before, people came to us when they hit a crisis. Now they come to us as a preventative measure," said Emily Appel, director of the savings program at Capital Area Asset Builders.
Appel said that demand has increased so much that the organization has added classes, with more middle-income people and professionals registering.
"When you see your friends go through financial crisis, you want to know how to prevent that from happening to you," Appel said.
While consumer spending, which represents 70 percent of the economy, helped lift the nation out of previous recessions, this time, consumers are treading more cautiously.
The savings rate in October reached 4.4 percent, up from 0.8 percent in April 2008. Some economists predict that savings will return to the 7 to 8 percent levels recorded before 1990.
"The increase in saving, which is the mirror image of reduction in consumption, will hurt the economy in the near to intermediate term," said Allen Sinai, chief global economist at Decision Economics. Banks are the winners when consumers save, Sinai said, but there are "more losers than winners."
"Who loses? The economy loses," Sinai added, because "weak consumption was part of bringing the economy into the deepest recession since the Great Depression." As a result, unemployment will remain high.
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