Retrench? Not Till Their Last Credit Card Is Maxed Out

It’ll be a sad day for the American people if the economy’s downturn forces them to restrain their spending. More precisely, it’ll be a sad day for 57 percent of them. That’s the number who answered “yes” when asked, in a poll conducted for Adweek by Alden & Associates Marketing Research of Hermosa Beach, Calif., “Does buying something generally make you feel happier?” Economists worry that a drop in consumer spending will trigger a severe recession. Even if we’re spared such dire consequences, though, spending may now be so central to people’s sense of well-being that austerity will leave the country in a foul mood. Apart from the generic pleasure of buying, people have grown attached to luxuries. Remarking on this phenomenon, an article in U.S. News & World Report offered a telling quote from an analyst at an investment bank: “Once you move up, it’s hard to trade back down.” If anything, trading down has become harder than it was the last time the economy tanked. Consumers en masse have developed refined (as opposed to flashy) tastes, and there aren’t cheap substitutes for refinement. Moreover, when people view the indulgence of their refined tastes as a virtue—a trend David Brooks dissected in his recent book on the rise of the “bourgeois bohemian”—they won’t draw consolation from giving it up in favor of the simple life. As far as these high-spending bobos are concerned, they already lead the simple life. In short, cuts in consumer spending won’t have the moralistic window-dressing that accompanied austerity after the decade-of-greed ’80s. Nonetheless, will the threat of recession force affluent consumers to retrench? A Washington Post/ABC News poll offers a clue. While 50 percent of people with income under $30,000 believe the economy “is heading into a recession,” just 37 percent of those making $75,000-plus believe the same. And if that’s how they feel, why on earth would these upper-income folks cut back?