Magazine article Newsweek

What's a Shopper to Do? Our Restaurant Tabs and Spending Sprees Have Fueled the Boom. but Some of Us Are Already Beginning to Cut Back

Magazine article Newsweek

What's a Shopper to Do? Our Restaurant Tabs and Spending Sprees Have Fueled the Boom. but Some of Us Are Already Beginning to Cut Back

Article excerpt

When it comes to the slowing economy, Ellen Spero isn't biting her nails just yet. But the 47-year-old manicurist isn't buffing, filing or polishing as many nails as she'd like to, either. Most of her clients spend $12 to $50 weekly, but last month two longtime customers suddenly stopped showing up. Spero blames the softening economy. "I'm a good economic indicator," she says. "I provide a service that people can do without when they're concerned about saving some dollars." So Spero is downscaling, shopping at middle-brow Dillard's department store near her suburban Cleveland home, instead of Neiman Marcus. "I don't know if other clients are going to dump me, too," she says.

Even before Alan Greenspan's admission that America's red-hot economy is cooling, lots of working folks had already seen signs of the slowdown themselves. From car dealerships to Gap outlets, sales have been lagging for months as shoppers temper their spending. For retailers, who last year took in 24 percent of their revenue between Thanksgiving and Christmas, the cautious approach is coming at a crucial time. Already, experts say, holiday sales are off 7 percent from last year's pace. But don't sound any alarms just yet. Consumers seem only mildly concerned, not panicked, and many say they remain optimistic about the economy's long-term prospects even as they do some modest belt-tightening. Typical is the Brown family of Newark, Dela., who've started buying paperbacks instead of hardcover books and wool sweaters instead of cashmere. Tim Brown, a utility executive, hopes to carve 10 percent off the family's $1,500 Christmas shopping budget. "We're going to be more frugal without being Grinches," he says.

Consumers say they're not freaking out because, despite the dire headlines, their own fortunes still feel pretty good. Home prices are holding steady in most regions. …

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