From the October 2009 issue of Boomer Market Advisor • Subscribe!

Frugal baby boomers - the new normal?

A year after "shop 'til you drop" stopped, the nation fixates on this question: Will consumer spending ever return to pre-recession levels?

So asks the Associated Press, and increasingly, the answer appears to be no. Belt-tightening in bad times is normal, notes the wire service. And after every other recession since World War II, penny-pinching quickly fell out of fashion and Americans resumed their demand for houses, cars and everything else.

But ignoring the late (and great) Sir John Templeton's observation about the four most dangerous words in investing, the AP laments "This time it's different."

"Like the Great Depression in the 1930s, the Great Recession seems destined to turn many Americans into lasting coupon-cutters, scrimpers and savers. Consumers dug a debt hole over the past decade from which there's no easy climb out. The population segment that drives spending the most -- baby boomers -- faces special pressure: Boomers are running out of time."

Referencing a recent study by research firm AlixPartners, the AP says that once the new normal sets in after this recession ends, Americans will spend at about 86 percent of their pre-downturn level.

"A year after last fall's financial meltdown turned a garden-variety recession into the worst downturn since the Depression, thriftiness is still driven by the twin engines of necessity and fear. Unemployment, now at 9.7 percent, is still rising and expected to reach double digits before year's end for the first time since 1982. Many who still have jobs are getting paid less, and investments have a long way to go before they return to pre-meltdown levels."

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