The urge to splurge

"No interest until 2014," read the massive red sign outside Big’s Furniture in Henderson, Nev. It beckoned Diane Lewis to the store’s year-end liquidation sale. “I had to pull in,” she said as her sons frolicked on mattresses nearby. “We really need to get us a new bedroom set; their old one is kinda beat up. If we can get that financing deal, we can make it work.” As with most in this hard-hit region, the economy hasn’t been good to Lewis, whose husband just got a new job after being laid off for eight months.

They’re two months behind on their mortgage, “but we’re gonna catch up,” and she figures the family probably owes about $20,000 on various credit cards. “I know I probably ought to wait a little longer,” said Lewis, a hairdresser, “but this is a pretty good sale, so I think we might buy something if they’ll approve us. I mean, 2014 is a long way off, you know?”

Old habits die hard. It was only last year that shell-shocked consumers were pledging their allegiance to the “New Frugality.” Chastened by the brutal lessons of the worst economic downturn in decades, Americans swore off conspicuous consumption and resolved to embrace the thrifty ways of their grandparents who lived through the Great Depression. But as any dieter can tell you, resolutions are made to be broken.

Even as Americans are still struggling to meet mortgage payments, pay off credit cards, and replenish savings, they’re also starting to spend again—whether they have the money or not. Last week, fresh numbers showed household spending rising for the fifth month in a row and consumer confidence reaching its highest level since June. Per capita retail sales are now back up to where they were in the fall of 2008, just before the collapse of Lehman Bros. tore the bottom out of the economy. If you factor out spending on cars, which is still 18 percent below its 2005 peak, Americans’ total spending on goods and services has now passed pre-crisis highs.

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