NYT Reports Consumers Still Reluctant to Spend

Even as evidence mounts that we are recovering from the recession, experts worry that consumers may still be reluctant to spend, reports the New York Times. A marginal shrinking of consumer spending could significantly depress demand for goods and services, discouraging businesses from hiring more workers.

Even those who have not been hurt too hard by the recession feel pressure to conserve, fearful about layoffs, the stock market and real estate prices. "It's simply less fun pulling up to the stoplight in a Hummer than it used to be," said Robert Barbera, chief economist at the research and trading firm ITG. "It's a change in norms."
"We're at an inflection point with respect to the American consumer," Mark Zandi, chief economist at Moody's Economy .com..."There's still a lot of debt out there. It throws a pall over the potential for a strong recovery. The economy is going to struggle."

Some economists interviewed by the NYT suggest the recession has endured so long that is has "seeped into the culture, downgrading expectations and clouding assumptions about the future. "Not only have people lost money, but they don't expect as much appreciation in the money they have, and that should affect consumption," said Andrew Tilton, an economist at Goldman Sachs. "This is a cultural shift going on. People will save more."