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Is The New Frugality Transformative Or Transitory?

Mackey isn't the only one pondering whether the lessons of the last year will have a permanent impact on the psyche of the American shopper. Michele Heller talks to consumers and experts about the penny-pinching that's suddenly in vogue and leaves us with the impression that spending habits may be altered forever, but that's a good thing for the economy in the long term.

"There will be good things that come out of this recession," Marcia Tillotson, a financial adviser at Wells Fargo Advisors, tells her. "Many people had not been conscious of what their lifestyle cost. Now, all of a sudden, they have become conscious of how they spend their money." Adds Gerri Detweiler, a personal finance adviser for "You have to feel the pain before you really make a change."

Bernard Baumohl, the chief global economist at the Economic Outlook Group, predicts that consumer spending will contribute 65 to 67% of the gross domestic product in 2015, down from the traditional 70%, with exports and business spending contributing more. In short, people will become more disciplined about debt and savings.



Speaking of penny-pinching, Hugo Martín writes in the Los Angeles Times that Southwest Airlines' "bags fly free" strategy is a key reason the carrier has gained market share this year. "How long can it resist adding the fee?" he asks. Since its whole marketing campaign revolves around the differentiation, he surmises it has many miles to go.

Read the whole story at Washington Post »

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