Will saving more and spending less deepen the recession? on clarkhoward.com

A recent Wall Street Journal article announced that Americans are finally beginning to save more and spend less. That's great news, right? Not exactly. The article went on to explain how a nation of consumers tightening its purse-strings can actually prolong our current recession.

Historically, if you wanted something, you actually paid for it. But then in the late 1980s, we saw a modified version of the American dream where banks handed out money like candy. Human nature being what it is, we took advantage of it.

The peak of the madness was probably the "no, no, no" plans -- no payment, no down-payment and no interest for a year. You could get furniture, a new car, a new TV, heck, even a new house in this way!

So should you heed The Wall Street Journal's warning and go back to spending more freely? As Clark would say, don't be a sap. You're not being patriotic by spending yourself into oblivion. Yes, in the short term, saving more and spending less could deepen the recession, but it also makes it possible for a real long-term recovery. That's just a fact.

So if you've newly discovered thrift, know that it benefits you. Your anxiety goes down as you extinguish debt.

What others are saying

SAVE FIRST
Buy what you need....with cash
Buy what you want....with cash

Problem solved.
By Tom @ 01/08/09 06:00:31 PMreport abuse
Needs vs. Wants
Clark said above:
"So should you heed The Wall Street Journal's warning and go back to spending more freely? As Clark would say, don't be a sap. You're not being patriotic by spending yourself into oblivion. Yes, in the short term, saving more and spending less could deepen the recession, but it also makes it possible for a real long-term recovery."

I'm not gonna say this isn't true but it will definitely make for a longer period of time in recession before that real recovery has taken grasp.

If we all change our habits and don't spend but save more, then jobs will not reappear, businesses will continue to go out of busniness. Now you say, just buy the things YOU NEED . . . . can a country's economy grow and thrive off just the things that are needed?

We had better all get jobs in either a grocery store, in the health industry or in water treatment plants and maybe a few other needed industries cause that will be the only places people will be spending for growth if need based spending is all we are gonna do for a while.

I really hate to see this happen to the industry which supported me and my husband for 35+ years and which was so good to us - but the thing that we created a need to only a few but a want of many - original art. Are we gonna thrift ourselves into the denial of things (yes, things) that make life full, whatever those things might be for you? What about you, Clark?
So perhaps the real recovery will be based on moderation rather than oblivian
and the real part comes from setting priorities of wants and having the cash to parttake in those wants.
By ieshacat @ 01/08/09 03:29:56 PMreport abuse
who wants to save
Who wants to save when cd rates are around 3% ? My main point was people like Jeff who want to sit and do nothing with thier hands out waiting for free money from uncle sam are why we are in this hole...bailouts are wrong in principle because they reward failure...it may be nessesary to keep the economy floating, but I say people and companies should learn from thier failures and do something to make the next effort succeed, not cry about thier situation and expect Obama to give them money. how bout this plan?: everyone on welefare and unemployment goes out and gets a job that an illegal worker is doing...it sends them home due to lack of jobs...puts more tax money in the coffers because they never paid taxes on those jobs, and saves the fed money in handouts....make it a law that as long as the adults in a household have a full time job (any job) they can't be foreclosed on...and start some major public works projects like FDR did post depression era...you could hire people for half of what they pay DOT workers now and get the crmbling infrastructure around this country fixed in half the time....no more would we see 1 guy digging and 6 guys standing there getting paid to watch....I'd love to see people who want to work doing the job instead of these DOT guys getting paid big bucks to do as little as possible....outlaw time and material jobs where companies are overpaid to stretch a job out...put in deadlines and penalties for not meeting them....and whether its the DOT worker or your congressman, if they are standing around pretending to work but not actually getting anything done, fire them!!
By Dave @ 01/08/09 03:21:39 PMreport abuse
Obama's Plan Helps Everyone, Dave
Dave, actually Obama's planned "tax" breaks will go to everyone regardless of whether or not they actually pay taxes.

All they are doing is making things worse. The solution is to cut spending and save, for both individuals and the government.
By Bryan @ 01/08/09 01:51:59 PMreport abuse
The new new deal
Yes Dave, the Lord helps those that help themselves. Just ask guys like Madoff, Skilling, Paulson, Fuld. Raines, etc., etc. The helped themselves to generous portions of other people's money, and now the federal government has decided to do the same. Jeff has the right idea -- if you whine and scream loudly enough, the money will rain down like manna from heaven. Obama's latest blather about record deficits and spending is only adding fuel to the fire.

I always thought of myself as a fiscal conservative, but hey, why fight the inevitable? The financial tsunami is coming and damn if I'm going to stand there daring it to wash me away. I'll grabbing a surf board and stand next to Jeff!
By Arthur @ 01/08/09 12:33:24 PMreport abuse
jeff
Mr. Obama promised to help the economy by saving jobs....so if you have no money, stop sittin there waitin fo your check and go get a job and earn your check...he's planning on giving a $1000 tax break as part of his plan, but that means you have to have a job and be paying taxes to get some MONEY from him...bottom line is the lord helps them who help themselves....it's attitudes like Jeff's that keep us down in a hole.
By Dave @ 01/08/09 11:46:58 AMreport abuse
recession
Thank you clark--now just send this to all our congressmen!
By Lucian @ 01/07/09 08:48:07 PMreport abuse
So where be _my_ check?
Mr. Obama promised me mo money, mo money, mo money! All 'cause I have no money. So I sits here waitin' fo my check, and it better be a BIG one!
By Jeff @ 01/07/09 04:31:48 PMreport abuse
Big Picture
our economists are too focused on nations economy and forgot that individual people actually form a nation. so if we are saving more and spending less,eventually nation goes towards correct path.
By don @ 01/07/09 04:22:17 PMreport abuse

SAVE FIRST

Buy what you need....with cash
Buy what you want....with cash

Problem solved.

By Tom @ 01/08/09 06:00:31 PMreport abuse

Needs vs. Wants

Clark said above:
"So should you heed The Wall Street Journal's warning and go back to spending more freely? As Clark would say, don't be a sap. You're not being patriotic by spending yourself into oblivion. Yes, in the short term, saving more and spending less could deepen the recession, but it also makes it possible for a real long-term recovery."

I'm not gonna say this isn't true but it will definitely make for a longer period of time in recession before that real recovery has taken grasp.

If we all change our habits and don't spend but save more, then jobs will not reappear, businesses will continue to go out of busniness. Now you say, just buy the things YOU NEED . . . . can a country's economy grow and thrive off just the things that are needed?

We had better all get jobs in either a grocery store, in the health industry or in water treatment plants and maybe a few other needed industries cause that will be the only places people will be spending for growth if need based spending is all we are gonna do for a while.

I really hate to see this happen to the industry which supported me and my husband for 35+ years and which was so good to us - but the thing that we created a need to only a few but a want of many - original art. Are we gonna thrift ourselves into the denial of things (yes, things) that make life full, whatever those things might be for you? What about you, Clark?
So perhaps the real recovery will be based on moderation rather than oblivian
and the real part comes from setting priorities of wants and having the cash to parttake in those wants.

By ieshacat @ 01/08/09 03:29:56 PMreport abuse

who wants to save

Who wants to save when cd rates are around 3% ? My main point was people like Jeff who want to sit and do nothing with thier hands out waiting for free money from uncle sam are why we are in this hole...bailouts are wrong in principle because they reward failure...it may be nessesary to keep the economy floating, but I say people and companies should learn from thier failures and do something to make the next effort succeed, not cry about thier situation and expect Obama to give them money. how bout this plan?: everyone on welefare and unemployment goes out and gets a job that an illegal worker is doing...it sends them home due to lack of jobs...puts more tax money in the coffers because they never paid taxes on those jobs, and saves the fed money in handouts....make it a law that as long as the adults in a household have a full time job (any job) they can't be foreclosed on...and start some major public works projects like FDR did post depression era...you could hire people for half of what they pay DOT workers now and get the crmbling infrastructure around this country fixed in half the time....no more would we see 1 guy digging and 6 guys standing there getting paid to watch....I'd love to see people who want to work doing the job instead of these DOT guys getting paid big bucks to do as little as possible....outlaw time and material jobs where companies are overpaid to stretch a job out...put in deadlines and penalties for not meeting them....and whether its the DOT worker or your congressman, if they are standing around pretending to work but not actually getting anything done, fire them!!

By Dave @ 01/08/09 03:21:39 PMreport abuse

Obama's Plan Helps Everyone, Dave

Dave, actually Obama's planned "tax" breaks will go to everyone regardless of whether or not they actually pay taxes.

All they are doing is making things worse. The solution is to cut spending and save, for both individuals and the government.

By Bryan @ 01/08/09 01:51:59 PMreport abuse

The new new deal

Yes Dave, the Lord helps those that help themselves. Just ask guys like Madoff, Skilling, Paulson, Fuld. Raines, etc., etc. The helped themselves to generous portions of other people's money, and now the federal government has decided to do the same. Jeff has the right idea -- if you whine and scream loudly enough, the money will rain down like manna from heaven. Obama's latest blather about record deficits and spending is only adding fuel to the fire.

I always thought of myself as a fiscal conservative, but hey, why fight the inevitable? The financial tsunami is coming and damn if I'm going to stand there daring it to wash me away. I'll grabbing a surf board and stand next to Jeff!

By Arthur @ 01/08/09 12:33:24 PMreport abuse

jeff

Mr. Obama promised to help the economy by saving jobs....so if you have no money, stop sittin there waitin fo your check and go get a job and earn your check...he's planning on giving a $1000 tax break as part of his plan, but that means you have to have a job and be paying taxes to get some MONEY from him...bottom line is the lord helps them who help themselves....it's attitudes like Jeff's that keep us down in a hole.

By Dave @ 01/08/09 11:46:58 AMreport abuse

recession

Thank you clark--now just send this to all our congressmen!

By Lucian @ 01/07/09 08:48:07 PMreport abuse

So where be _my_ check?

Mr. Obama promised me mo money, mo money, mo money! All 'cause I have no money. So I sits here waitin' fo my check, and it better be a BIG one!

By Jeff @ 01/07/09 04:31:48 PMreport abuse

Big Picture

our economists are too focused on nations economy and forgot that individual people actually form a nation. so if we are saving more and spending less,eventually nation goes towards correct path.

By don @ 01/07/09 04:22:17 PMreport abuse

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Jan 07, 2009 -- Will saving more and spending less deepen the recession?

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