The collapsing housing market, shaky employment security, and uncertain economic outlook are changing Americans' buying habits: They’re paying with cash. Plastic has become synonymous with debt, helping revive the pay-as-you-go mentality, reports the New York Times. The change could have a major impact on an economy, and a culture, based on consumer credit.
A generation ago, Americans put away upward of 10% of their income; today, the savings rate is below zero. Some 33% of Americans borrowed against home equity to fund daily expenditures, spending so much that their savings reflected a negative 13% rate by 2006. It’s improved somewhat, but, says one economist, “For them, that game is over.”