NEW YORK - The gloomiest outlook for the economy in 35 years may be forcing Americans to live with what they have and save up for what they want.
Lynda Nicely has been living in a sparsely furnished rental apartment in a Milwaukee suburb since October while she saves enough money for furniture at a secondhand store. And when temperatures soar this summer, she plans to buy a fan, not an air conditioner.
"I am a little rattled," said the 28-year-old resident of West Allis, Wis., who took a second job as a waitress and plans to hoard three months' worth of emergency cash just in case she loses her primary job in public relations.
A growing number of anxious people across all income segments are shopping at less expensive stores, reacquainting themselves with the library, paying down credit card debt, and cutting back on new clothes and cars, vacations, and meals out. The psychology of the U.S. consumer has turned as worries heighten about the job market, the slump in real estate, and soaring daily living costs.
Industry followers say shoppers' fear, which has been escalating since last July, could worsen what ails us.
Such spending cuts could be "a self-fulfilling prophesy" and could hasten the economy's slide, said Lynn Franco, director of the Conference Board Consumer Research Center.
"I don't think [the spending slump] has bottomed out," said Candace Corlett, of the consulting firm WSL Strategic Retail. "Shoppers are learning a new behavior: how to resist temptation. There is a lot of fear out there."
Such worries are driving shoppers to cut back on big-ticket items like appliances, delay redecorating their houses, and shop at discounters like Wal-Mart Stores Inc. and thrift stores for second-hand clothing.
Shoppers' economic outlook for the next six months is at a 35-year low, levels not seen since the oil embargo and the Watergate scandal, according to a reading last week by the Conference Board, a business-backed research group.
Many analysts expect only a small sales lift starting in May when consumers begin receiving rebate checks from the federal government's stimulus plan, but any bump should only be temporary. Michael P. Niemira, chief economist at the shopping center group, believes the malaise could extend into next year.
Job security is key to consumers' willingness to spend, and amid the dreary news many are taking drastic measures. The national unemployment rate for March, released yesterday, jumped to 5.1 percent from 4.8 percent the month before, and employers slashed 80,000 jobs.
Trend analyst Faith Popcorn, founder of the consulting firm BrainReserve, sees the "stripping down" trend as positive.
"I think we are going back to the '50s decade," she said. She expects consumers will start growing food in their own gardens and mend worn garments.