Long after the Great Depression ended, many of the Americans who lived through it continued to spend carefully.
They reused everything — rubber bands on rolled-up newspapers, margarine containers, paper bags from the grocery store. Many of them preferred cash to credit, taking on debt only to buy a house and, perhaps, a car.
Kenneth Smith, associate professor of economics at Millersville University, said his grandparents never wasted anything. His grandfather, he said, never lost his job setting up and repairing telephone lines during the Depression, but his grandparents saw people all around them who were in dire straits.
"They realized it could happen to them, and they were determined it wouldn't," Smith said, noting that his grandparents went on to live a comfortable life, but remained "the most frugal persons I knew."
In recent years, such frugality came to be seen as a quaint vestige from a distant past.
Now, however, as the United States struggles through a financial crisis, and economists argue over whether the country is or is not mired in a recession, many Americans are having to reconsider spending habits that would have appalled their predecessors.
A study by the Homeownership Preservation Foundation found that 43 percent of American households spend more than what they earn annually.
The average American household carries a credit card debt of more than $8,000. According to The New York Times, as household debt has mounted, incomes have stagnated for many Americans, and so a greater percentage of disposable income is spent on simply servicing debt. The personal savings rate is scant. "More ominous," The Times reported, "as Americans have dug themselves deeper into debt, the value of their assets has started to fall."
Will the current economic crisis cause Americans to rethink their approach to spending? And will they be scared straight for the long haul?
People certainly are scared right now, said Desiree Crawford, of Mountville, who was shopping with her mother-in-law, Shirley, one afternoon last week at Kmart.
Crawford's cart was filled with pots and pans for her family's new home, and Christmas presents for her 4-month-old baby. She was planning to avail herself of a shopping option that some retail experts predict might have renewed popularity this holiday season: layaway.
It would be the first time, in a long time, Crawford had used layaway, she said.
The mother of two said it is hard not to feel anxious about the economy these days. Even her adolescent son raised the subject with her recently, she said.
She's never late with a credit-card payment, she said, and yet her credit-card company called her last week, days before a payment was due, asking if she wanted to set up a payment plan.
Her husband travels 70 miles each way for work, and though gas prices have come down in recent weeks, her family's living expenses remain high, she said. The family rarely eats out, even when they're juggling their son's ice hockey practices and games.
One of her relatives recently warned that everyone is 30 days away from losing everything they have. If Americans are "not careful, we're going to be in a lot of trouble," Crawford said.
Karen Grant, of East Hempfield Township, agreed.
The single mother of a 14-year-old son, Grant said that for too many years, Americans have been "indulging our wants. And everyone is guilty of that. If you see something dangling in front of you, you're going to want it."
And, she pointed out, "we have all these choices."
"Everything is overkill," Grant said, noting that she took her son shopping recently for a Halloween costume. At the party store where she shopped with her son, there were hundreds of costumes and elaborate Halloween decorations for sale — some costing in excess of $100.
She explained to her son that a costume, which would be worn for only a few hours, wasn't worth that kind of money. And she talked to him about the difference between wants and needs. "I want to have a $100 costume," she recalled saying. "But do I need a $100 costume?"
She recalled a conversation she had with her son when he was 5 years old and imploring her to buy him something at a store. She told him she didn't have the money that day to buy something he didn't need. "He said, 'You have a blue card.' "
She quickly realized he was talking about a credit card.
"I said, 'The blue card is for emergencies. And the blue card is backed up by greenbacks. It's not a passport,'" she said, noting, "I didn't want him to grow up thinking, this is how you get what you want."
She told him: "What you don't understand is that this card can ruin your whole life."
She had learned this lesson in college, she said, when she had run up a sizable credit-card debt, and had to be bailed out by her mother. Since then, she said, she has tried to follow her mother's lead and spend more wisely.
Her mother, who also was a single mom, was born in the West Indies, and moved to England, where she trained and worked as a nurse, before immigrating to the United States. Her mother worked long hours, and didn't have much, but was proud of what she could provide.
Grant, born in New York City, was relocated to Lancaster County by her employer, a surgical support company. She has found her piece of the American Dream here — she purchased a house a year ago, with a fixed-rate mortgage. "I didn't want to overextend myself," she said, noting that she still has college loans she is paying off.
"Everybody's always one incident away from something that's catastrophic," she said. "There's always that 'what-if?' "
Sometimes, she said, "People don't want to admit that, and therefore they don't prepare. ... People take everything for granted."
One thing Americans have taken for granted is that their lives would be better than those of their parents, said Jeffrey Podoshen, assistant professor of business, organizations and society at Franklin & Marshall College.
"The reality is that our parents have lived pretty darned good," he said. "... To beat that, we have to have bigger, better cars, larger property and consume more."
For many modern Americans, conspicuous consumption — rather than values such as thriftiness and fiscal prudence — hold sway, and that might not easily change, Podoshen said.
"We have lived too well for too long — we forget, in many cases, the sacrifices that our grandparents and great-grandparents had to make," he said, noting that many Americans are generations removed from lives of hardship and privation.
Previous generations embraced the credo that good things come to those who wait. Americans now want instant gratification, Podoshen said.
Aspiring to the good life, they don't want to wait until they can truly afford it, he said, noting, "Part of it is that we're so used to having everything on demand, and we want it when we want it."
As wealthy Americans got even wealthier in recent years, new standards have been set for luxury, and "the middle class, as they've been trained to do," has tried to keep up, he said.
Even small houses now have bathrooms appointed with tumbled marble. "Everything has seemed to have gotten more lavish," Podoshen said, noting that shopping malls (including Park City Center) have added high-end stores.
Just who's shopping in those high-end stores, however, Podoshen isn't sure. In King of Prussia, where he lives, you can't find a parking space outside of Wal-Mart, he said, while "Neiman Marcus is a ghost town."
The recent mortgage foreclosure crisis was searing proof that people's aspirations have outstripped their means, he said.
"You had all these folks who were jumping on this house-buying, mortgage bandwagon," Podoshen said. "Even though our parents said we should save for a 20-percent down payment, we thought, 'No one's doing that.'"
So people had homes they couldn't afford, and zero equity — "and in many respects, negative equity," he said.
Now, Americans have been thrust into a period of sobriety, which Podoshen doesn't expect will last. He foresees a period of caution, and probably a low-key holiday shopping season, and a return to the values championed in the iconic "Charlie Brown" Christmas special.
He said he hopes "that consumers are paying attention to why everything collapsed. ... It collapsed because of greed and instant gratification."
But he said he doesn't expect there will be any seismic cultural shift.
"We haven't really felt the pain," he said. "We would have to have something like the Depression to really feel the pain."
Great numbers of Americans are living in poverty, and struggling with what experts on hunger term "food insecurity." Charities serving the needy here in Lancaster County are busy.
But this county has been insulated somewhat because so many people here are employed in recession-proof fields such as agriculture, health care and education, said Smith, of Millersville University.
Nevertheless, even Lancaster County isn't insulated from the pervasive fear about the economy. "There's no way to get around it; people are scared right now," Smith said.
But he thinks this fear may have only a temporary effect. Referring to the financial crisis, he said, "I don't think this is an event that is going to cause an entire generation to change their habits."
Like Podoshen, Smith said he expects people to rein in their spending this holiday season. But he said he doesn't foresee Americans falling out of love with credit.
"People have a strange psychology about credit cards," Smith maintained.
They may be reluctant to take out a home equity loan, because they don't want to borrow a large sum of money all at once, he noted. But they think nothing about using their credit cards to buy a restaurant meal, or groceries, which they will consume right away — and then spend months, even years, paying off.
He said if credit becomes harder to get, that might force a change in consumer behavior. Credit-card companies already have raised their rates and late fees. And it's not as easy as it was several years ago to transfer balances from one credit card to another card with a lower interest rate, Smith said.
James Kurre, associate professor of economics at Penn State-Erie, said he hopes that Americans, having witnessed the financial crisis, and the "downside of the unwise use of credit," will re-evaluate their own use of credit.
"Hopefully, some of us can learn from other people's mistakes, too," Kurre said.
"The key issue, I think, is living within their means," he said. "Our means are much greater now than 40 years ago, so we can afford more. But some people have got into thinking, 'I can have whatever I want.' ... They haven't made the hard choices."
But will they start making the hard choices now?
Smith said the Great Depression was a calamity that had a "profound effect," but even that faded over generations.
Podoshen said he thinks "we'll be careful for a while," but Americans eventually will return to their free-spending ways.
"Our memories are going to be very short," he said. "Five years from now, we're going to forget this."
Suzanne Cassidy is a staff writer for the Sunday News. Her e-mail address is scassidy@lnpnews.com.
