Is the Newly Prudent Consumer Killing Your Economy?

For the good of the economy, you should technically be spending money you don’t have. But here's something you should stop buying: premium gasoline. Apparently there's nothing premium about it except the price. Click here to read more.

(Time Moneyland) How the Newly Prudent Consumer Is Killing the Economy

THE ECONOMY

By BRAD TUTTLE | @bradrtuttle | August 31, 2011 | 17 COMMENTS

Today’s consumers are increasingly likely to pay off credit card bills in full, skip vacations, dine out less, hold off on buying big-ticket items like new cars, and even trim everyday expenses by, say, subbing a generic cereal for Kellogg’s Corn Flakes. They’re avoiding debt like the plague, and because consumer spending accounts for 70% of economic activity in the U.S., the widespread scaling back by consumers is seriously hampering the economy’s recovery.

The irony, of course, is that consumers are scared to spend because the economy is so shaky, and a prime reason the economy is so shaky is that consumers are too scared to return to the spending habits of five years ago.

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