Borrowers of the ‘80s Are Becoming Bargainers of the ‘90s : Consumers: A little known statistic economists use shows people are looking more for low prices than prestige labels. Thrift is in, and those who live beyond their means are viewed as foolish.

It was a traditional once-a-year holiday gathering of neighbors.

“I got it at a thrift shop,” said the owner of a handsome sport jacket. He explained that he never bought anything at full price anymore, but you wondered if modesty was pride disguised.

Was this the same fellow who so conspicuously displayed his Guccis and his Jaguar in 1987? Who might have bragged about how much--”Did price really matter?”--not how little he paid for the sport jacket?

A real estate saleswoman spoke. “It’s a problem,” she said. “Everyone wants a bargain today, and they’re not afraid to ask.” She lamented the passing of the mid-1980s, when couples outbid each other for properties.

Those were the days when people dared to experiment with their money and their way of life, when something new meant something good, when people bought with abandon because they could always pay for it in a better tomorrow.

They’re not so certain now. Security dictates behavior. The future is as uncertain as the present, and those who live beyond their means are viewed as foolish. Thrift is in. If you’re cautious you’re prudent; you’re with it.

Times have changed. People have hunkered down and are buying down. You can prove it by a little known statistic economists call the consumption deflator. It shows people are looking more for low prices than prestige labels.

Should you question statistical proof, as many do today, then let the big-name symbols such as Betty Crocker and the Marlboro man tell you about their battle with lower-priced generic brands.

Despite recent signs of economic strength, family budgets are tight. Spending has risen at the slowest rate since World War II. Savings rates have dwindled. By some estimates a third of households have no discretionary income--nothing left after paying for basics.

The evidence also shows a more cautious and responsible attitude about indebtedness. Although consumers borrowed more with their credit cards this past year than in 1992, overall installment debt remains substantially lower than its 1990 peak. Loan delinquencies, a sign of debt recklessness, are at the lowest level in nine years.

What emerges is a picture of Americans feeling stress, regardless of what economists and government officials and their statistics say.

Official data do indeed show an expanding economy. Personal income, for example, rose 2.3% in the second quarter after declining 1.4% in the first. Inflation figures released earlier this month were tame. Interest rates, though slightly higher in recent weeks, remain quite low.

But how can the economy be up when so many people feel down? Has the American consumer changed fundamentally?

“Twaddle,” says Fabian Linden, an economist at the Conference Board, a business research group that has studied consumer behavior for decades. Consumers just don’t change quickly in fundamental ways, he says; they react rationally to the economic climate.

By this reckoning, when the economy emphatically improves, you will see consumer behavior change in predictable ways. In Linden’s view, the media obsession with how consumers might react to this or that event is meaningless.

The most recent Conference Board reading on the consumer mood showed a sharp rise in confidence during November. But Linden and other economists cautioned not to read too much into a one-month snapshot view.

Another longer-term Conference Board study shows disposable income has risen 45% in the past two decades. It suggests living standards of the average American will basically double in slightly more than 35 years--a single generation.

Nonetheless, the same study also provides an explanation for consumer stress. It found that over the past 20 years, women accounted for 60% of the incremental increase in the U.S. labor force.

“Change in the family structure has ramifications across society,” says Stephen J. Hoch, a professor at the University of Chicago who specializes in behavioral science. It takes better management of time, yes, and money too.

In fact, unlike periods when the economy expands swiftly, good news today is bad news too. Low interest rates help debtors but hurt savers. Prices may be stable, but state and local taxes have jumped. The cost of health care, which everyone wants, has become an issue in every home.

These anomalies cast shadows of doubts on the performance of the economy. They create confusion and a cautious, not-now-but-later mood among consumers. But they’re not the only causes.

Also contributing is the greatest job insecurity of any postwar economic recovery; until recently, slow pay raises and falling real estate values; big debt hangovers from the 1980s; low or no savings. All are factors, and their restraining influence is obvious.

Less measurable is the impact of events less direct: Government deficits and the failure to contain them; a sense that business and jobs are changing in ways difficult to comprehend; violent crime; the quality of education.

Such items--anyone can enlarge the list--help produce contrasts in behavior between 1993 and a decade earlier.

Broadly and perhaps superficially, we were careless or exuberant in the 1980s and we are overly cautious in the ‘90s. In the mid-1980s we were confident in our economic direction, which was up; in the early 1990s we have our doubts.

Still, we try to make the most of it, harboring assets and putting our houses in order if we can, and smiling for the world to see, like the fellow at the party who no longer can afford a full-price sport coat, let alone a Jaguar.