Have Americans Changed Their Spending Habits?

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by: Michael Panzner

In some of my earlier posts (e.g., "Another Industry that Is Not Recession-Proof" and "Recession-Proof?"), I pooh-poohed the popular notion that certain sectors will somehow be unaffected by the powerful recessionary winds sweeping across America.

Record high debt levels, ultra-low personal savings rates, and a U.S. - and world - economy that has been overly dependent on a free-spending American consumer virtually ensure that the fallout from economic contraction will be widely felt.

Even the consumer staples sector, which has been seen as something of a safe haven, is unlikely to come through the troubles ahead unscathed as competition increases and spending habits change.

It seems to me, for instance, that personal and household product companies have in recent years focused their attentions on "aspirational" shoppers, many of whom have tended to spend more than they could afford. In future, consumers like that will be few and far between.

Many major-brand makers also seem to have lost touch with how pricey their goods have become as a result of the numerous price increases that they were able to push through during better times.

Indeed, I've often wondered whether people will keep paying twice as much for Proctor & Gamble's (NYSE:PG) Tide detergent, for instance, as for other brands. Based on my own experience doing laundry (I'm no slouch, by the way), rival - and cheaper - products seem to do as good a job cleaning clothes as P&G's iconic offering.

Well, it looks like growing numbers of Americans, either out of choice or necessity, are starting to reevaluate their habits as far as spending on "necessities" is concerned. In a post at MSN Money's Top Stocks blog, "Pinching Pennies: Consumers Switch Brands," Anthony Mirhaydari details what could be a potentially far-reaching shift in behavior.

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