But Zhu Min, Group Executive Vice-President of the Bank of China, predicted that it will take many years for Chinese consumers to make up for the gap created by falling U.S. spending. The Chinese currently spend about $1.5 trillion, vs. the $10 trillion normally spent by Americans. Even with 21% annual growth in spending in China, that won’t be enough to make up for what Zhu projects to be “a sharp drop in American consumption for three years.”
The question is how long Americans will stick to their tighter ways. Will frugality become the “new normal” among Americans, as some people fear?
Frugality is not something to be feared but to be admired. Rather than spending what people don’t have if they live within their means and make good decisions on their spending, then the “new normal” as the article suggests could drive the market to make better higher quality products that are not disposable but reparable. Buying an inexpensive product that is well made because you have a coupon or the item is on sale or got an offer does not mean that the item is cheap just priced lower than normal. To buy a cheap item, based solely on cost though not made well could mean that the item has to be replaced soon.
I don’t think frugality is going to remain the norm in the country. Spending within your means and not spending everything you have is what I consider frugality. Buying quality instead of cheap or poorly made items is frugal.
When people get more money, they may forget. Especially those who were insulated from the economic problems. Encouraging people of all ages to save money and use credit wisely would be a better way of preventing the problem in the future. Necessity makes interesting actions. When people who have problems with money or lack money they will spend less or try to use what they have wisely. Once they get more, they may get spending happy. Case in point… all of the lottery winners who are broke after winning large prizes.
Getting and staying in a saving mind set even if you don’t have much or anything to save now will make a difference in the future.
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