How America shops now

The Great Recession that started in late 2007 turned the American shopper—famous for our free-spending ways—into the American scrimper. Thanks to the downturn we’ve been buying less of everything from housing to haircuts, driving our cars till they drop, and putting off big life moments such as getting married and having babies.

But guess what? After seven years of belt tightening, Americans are showing a new optimism. We’re ready to shop again. But we’re not the same old spendthrifts we used to be; this harrowing economic era has changed America’s buying habits, perhaps permanently.

These were among the findings of a groundbreaking study, done in June, by the Consumer Reports National Research Center. We wanted to determine, first of all, whether consumers have rebounded from the recession. The answer is yes. Our nationally representative study of 1,006 Americans shows that people are now in the market for homes, cars, and appliances—and that they plan to shell out even more money in the coming year.

The vacations, home renovations, even divorces that seemed out of reach during the recession are now on the front burner; seven out of 10 people told Consumer Reports that they finally feel flush enough to make purchases and decisions they’ve put on hold for as long as five years. Younger Americans—those 18 to 34—are particularly anxious to start spending: One in four told Consumer Reports they’re ready to buy a home, and one-third believe they can buy a car. And the shopping has already begun: Six in 10 people told Consumer Reports that in the past year they’d dropped big bucks on a major purchase—everything from cars and condos to refrigerators and TVs.

But just as the Great Depression scarred an older generation of Americans, so too has this country’s most recent economic contraction left behind a more cautious nation. Carl Van Horn, who is distinguished professor of public policy at Rutgers University and director of the John J. Heldrich Center for Workforce Development, and author of the book "Working Scared (or Not at All)," says that almost 75 percent of Americans either lost a job or had a relative or close friend who did in the last few years. “People have just been traumatized,” he says. “They’re still struggling, worried, and anxious. Even though they’re working, they don’t believe their jobs are stable, they fear layoffs, and there’s a sense of impermanence.”

That mingling of hope and caution can be found in consumers like Terry Manies, 47, of Lawrence, Kan. In 2009 Manies lost her $58,000-a-year job as grants director for Baker University. She took a temporary post, and a $5,000 pay cut, at the University of Kansas, followed by another lower-salaried job so far away that she was able to return home only on weekends.

Today Manies is working closer to home, in a retirement community, and actually earning a bit more than she did at Baker. She’s spending again—and has stepped up her charitable donations as a result of her experience—but she’s always looking over her shoulder. Still, for her and her husband, she feels the economy is turning. “But this notion of getting ahead, I don’t think that exists anymore,” she says.

In fact, pockets of woe remain. The majority of people—almost eight in 10—told us there were still certain things they couldn’t afford: For more than a third of people, the out-of reach dream was a new home; for others it was a pricey vacation or a flat-screen TV. But despite lingering worry, the national mood overall is upbeat. “Consumers are talking more positively about their personal financial situation now than at any time since the recession began,” says Richard Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers, which has been monitoring public sentiment for 60 years. The reasons? “Greater jobs availability, rising home prices, and a booming Wall Street, whether people own stocks outright or through their pension plans.”

For a closer look at the new American shopper, and how things have changed, read on. (And be sure to read "How Shoppers Spend Today" to see what consumers have to say about their spending habits.)

The purchases that define American consumers more than any other? Our cars and our homes. Car sales are skyrocketing today: 46 percent of people we surveyed bought a new or used vehicle in the past year or intend to buy one in the coming year.

Necessity is driving some sales. The average vehicle on the road is 11.4 years old, according to industry analyst IHS Automotive. (In cushier 2007 the typical car was 9.9 years old.) Sales bottomed out in 2009, but now that the economy is in recovery mode, “people are focusing once again on trading in or trading up to a new vehicle,” says Steven Szakaly, chief economist for the National Automobile Dealers Association.

Real estate is picking up, too. The dire images of the recent past—block after suburban block plastered with For Sale signs; people paying on mortgages worth more than the homes themselves—are fading. Twelve percent of survey respondents said they’d bought a residence in the past year or plan to do so in the year ahead.

That sunnier outlook also shows up in a study done in June by Thomson Reuters/University of Michigan: Half of all homeowners said that for the first time in eight years, prices had improved to the point that the idea of selling their home was attractive.

No surprise, then, that in 2013 existing home sales finally topped the 5 million mark, the first time since the downturn that sales reached levels set in 2007. Despite a slight dip in sales in 2014 because of higher interest rates, the National Association of Realtors’ chief economist, Lawrence Yun, expects a big rebound in 2015 (to 5.29 million). Also, foreclosures and serious mortgage delinquencies are roughly half of what they were in 2008 to 2009. Existing homes are getting a makeover, too: One-third of those we surveyed said they recently completed or are ready to do a major home-remodeling project.

Once we moved beyond the biggest-ticket items, we found that Americans are spending their money very pragmatically. Almost half of respondents told us that during the past few years they’ve been spending more on groceries; one-third are spending more on wellness products such as vitamins and moisturizers.