Shoppers taking the spree out of holiday spending

Anaheim resident Veronica Murillo admits she went overboard with her holiday shopping last year. She still owes about $800 in credit card bills.

“This year I’m going to stay within my budget,” Murillo, 22, told me at an Orange County Wal-Mart. “I’ll make a list of what I’m going to buy and calculate how much I’ll need.”

Will she pull it off? That’s an open question for Murillo and the millions of other people whose profligate ways in past years helped make U.S. consumers among the most indebted in the world.

According to the Federal Reserve, total consumer debt rose $3.75 billion in September to $2.48 trillion. That sounds like a lot -- and it is.

But what’s interesting about the latest Fed numbers is that they reflect a sharp slowdown in U.S. indebtedness. Consumer debt rose by just 1.8% in September, the slowest pace in five months and about half what economists had been expecting.

In August, by contrast, consumer debt surged $15.41 billion.

Revolving debt, including credit cards, rose by 4.4% in September -- also the slowest rate in five months.

With the shopping season picking up steam, American consumers clearly aren’t out of the woods debtwise.

But anecdotal evidence suggests that, after years of putting everything they desired on plastic, some people finally may be getting smarter about their finances.

And many, though they may not be conscious of it, seem to have a gut feeling that the economy is going to keep heading south.

“Consumers clearly know that something has changed,” said Robert Manning, director of Rochester Institute of Technology’s Center for Consumer Financial Services and author of “Credit Card Nation: The Consequences of America’s Addiction to Credit.”

“They can feel that a recession may be coming,” he said. “They’re being a lot more cautious.”

I certainly got that impression when I ventured the other day to Anaheim Plaza, a large, working-class mall off Interstate 5. In past years, such visits typically revealed that many people were more than willing to dig themselves into a fiscal hole by giving their credit cards a year-end workout.

This time, not one of the more than a dozen people I spoke with said they anticipated going deeper into debt this year. In fact, every one of them said they’d be working extra hard to live within their means.

This apparently mirrors the national trend. Manning said he heard the same when he conducted a survey of 500 households last month.

Wendy Leal, 46, made no secret of her economic wariness as she wheeled a shopping cart full of Christmas decorations to her car.

“I’m staying on a budget,” she declared. “I have a certain amount of money and I’m not using any more.”

It’s possible that American consumers, who account for two-thirds of domestic economic activity, have reached a tipping point when it comes to their tolerance for living life on the fiscal edge.

For years now, many people have used their homes as giant ATMs, cashing in on equity for big-ticket purchases such as luxury cars, billboard-size plasma TVs or overseas vacations. And those who might not have access to equity lines were still spending themselves silly, thanks to the ready availability of plastic.

Christina Starks, 26, said she tells herself every year to go easy on the spending. And every year, she spends more than she intended.

The solution, Starks said, was to not use a credit card. Instead, she now does all her shopping with a debit card and thus limits herself to cash on hand.

Holly Godfrey, 21, said she was doing the same.

“It’s Christmas,” she said. “I overspend on everything. But if I use my ATM card, I won’t end up with huge credit card bills.”

Along with a significant slowing in indebtedness, consumers are also showing that they’ve rediscovered the value of setting aside some money for a rainy day.

The Commerce Department reported this month that the U.S. savings rate rose to 0.9% in September, marking four straight quarters in the plus column.

A savings rate of less than 1% is pretty pathetic. Basically, we’re now socking away just 90 cents for every $100 we earn.

Nevertheless, that’s kind of a big deal because only a couple of years ago, the average American was saving absolutely nothing. For the first time since the Great Depression, the savings rate actually slid into negative territory.

That meant the average American not only was spending all of his or her after-tax income but also dipping into savings accounts, selling off stocks or borrowing cash to buy even more stuff.

David Crockett, an assistant professor of business at the University of South Carolina who specializes in consumer behavior, said he interprets the improving debt and savings numbers as reflecting a renewed sense of financial awareness among consumers.

At the same time, though, he said the numbers might not represent a long-term shift in behavior but rather a short-term response to economic uncertainty. Put less academically, the herd sniffs the faint aroma of recession on the breeze and is taking steps to protect itself.

“People have lost some confidence in the markets’ ability to bounce back from everything,” Crockett said. “When fears of recession start running high, people stick to the basics.”

Manning at the Center for Consumer Financial Services said that he thought things would get worse economically before they started to improve, and that consumers were increasingly taking steps to protect themselves.

“There are clearly signs that people have taken a step back and are starting to ask questions,” he said. “People are definitely starting to tighten their budgets.”

As for Murillo, who’s still carrying $800 in credit card debt from last year, she’s not thinking about recession or any other scary-sounding macroeconomic trend. She only knows that she needs to get her financial house in order.

“I have to be more careful,” Murillo said.

That may not be good for the overall economy if she and other consumers keep their purses and wallets shut. All in all, though, a little prudence probably isn’t a bad idea.

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Consumer Confidential runs Wednesdays and Sundays. Send your tips or feedback to david.lazarus@latimes.com.