To save or to spend? Americans ponder their duty

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(Agencies)
Updated: 2009-02-13 15:24

CINCINNATI -- After the September 11 attacks, US former President George W. Bush urged Americans to go shopping. As he hands out $789 billion in economic stimulus, US President Barack Obama has been less clear -- and Americans simply don't know whether they should save or spend.

"It's a tough question," said Cincinnati electrician and small businessman Mike Cavanaugh. "I think that in general the government wants us to spend. While saving may be better in the long run, spending I think can be contagious because we see each other doing it."

In Scottsdale, Arizona, business owner Bill Austin said the government's message has been mixed.

"The government doesn't know what's going to fix this, but I think they believe that people should start spending again," Austin said. But he's skeptical: "Just me going out and spending money isn't going to fix this."

After a year of being castigated for the consumerism that drove the nation's boom-and-bust housing market, Americans can be forgiven for not quite knowing whether they are doing the smart thing by spending or saving.

Obama, at his first news conference as president on Monday, dodged the question, arguing that consumers, like the government itself, need to do both.

"Our immediate job is to stop the downward spiral," Obama said, suggesting that spending was the answer. But he warned that thrift would be needed soon after.

"Once the economy stabilizes and people are less fearful, then I do think that we're going to have to start thinking about, how do we operate more prudently?" Obama said.

At the Consumer Federation of America, where economists expend great effort trying to teach Americans to spend wisely and save well, executive director Stephen Brobeck laments the suggestion that Americans have a duty to spend the nation out of recession, and only later tighten their belts.

A NUANCED MESSAGE

"We would prefer that our government leaders communicate a more nuanced message which distinguishes between economically insecure and economically secure families," Brobeck said.

People with lots of debt and no emergency savings should be working harder than ever to pay off their liabilities and save for an emergency fund, he said. But luckier Americans can do their part to throw a little fuel on the fire.

"It is in the country's interest for those households with discretionary income and job security to keep spending at past levels," Brobeck said.

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