Some save, others will stimulate economy

Washington Post

WASHINGTON — Alexa Choi did something recently that most Americans are avoiding: She spent money. Lots of it.

On Christmas Eve, Choi went to a BMW dealer and bought a black 2009 sedan. Her mother’s objections did not deter her. Nor did the fact that the value of her investments had shrunk by 40 percent. And that $48,000 price tag? No sweat.

“At the end of the day, I knew exactly what I wanted,” said Choi, 31, manager of a suburban technology company. “I needed the car, I had the money. So why not?”

While millions of Americans are losing their jobs and tens of millions more are hoarding cash, a small segment is spending freely, relying on steady incomes to buy clothes, finance European jaunts and renovate homes. A Washington Post-ABC News poll last month found that 3 percent of the population is spending more than usual.

Some shoppers are paying full price because they feel financially secure. Others are taking advantage of steep discounts. “It’s like ‘Let’s Make a Deal’ for the consumer,” said Marshal Cohen, a New York-based retail analyst. “If you have the money, now is the perfect time to buy.”

Some shoppers say they are conflicted about parting with their cash as their investments evaporate. And many are wary of being conspicuous about consumption at a time when people are suffering.

The discounts sucked Lloyd Carter, 44, into the previously unexplored world of shopping malls. During the economic boom, Carter, who works at the Library of Congress, envied people who bought grand homes and fancy cars, while he stuck with his 1996 Jeep Cherokee and stayed in his modest suburban Maryland townhouse.

Now, Carter said, he feels vindicated when he sees foreclosure signs. And on weekends, he has found himself taking advantage of generous markdowns in department stores.

“I can buy what I want,” said Carter, holding a $66 shirt marked down to $7.99 at a suburban Macy’s. He ended up with two shirts, two sweaters and pants for $49.30, well below the $200 list price.

During the boom that preceded the recession, Americans went on a prolonged spending binge fueled by easy credit, tapping home equity and credit cards to pay for luxuries. But as Wall Street and the housing market collapsed, consumer spending stalled.

According to the U.S. Bureau of Economic Analysis, Americans saved virtually none of their disposable income for most of the decade. But in January, the savings rate had risen to about 5 percent.