Welcome to the Sunday recession news roundup. Today, we have a theme: frugal consumer spending. How is tightening consumer spending affecting the market, and who are the winners and losers of this change in behavior? Without further ado, the roundup:

• Wise Bread: Does Frugality Hurt the Economy? - Remember those rebate checks? The point was to increase consumer spending, specifically discretionary spending. But most put their rebate checks towards their bills or towards savings, as a part of smarter and more frugal spending. But Brewer asks: Is this hurting the economy? Is it better for us to spend rather than save? In his opinion, there are indeed downsides like less money spent in the economy, but frugal spending causes less fear about recession and more economic stability. His rationale is not all that impressive, but his argument has merit: smarter spending, in my opinion, means more innovation to create smarter, cheaper, and better products. This in turn creates new market opportunities and new job creation. Coupled with less debt, a more frugal economy would be more efficient and more innovative.
• Wal-Mart had a strong report recently, but Target did not. The rationale according to 24/7 Wall Street? Consumers turn to Wal-Mart when they are penny pinching. Wal-Mart indeed seems poised to benefit from a recession. As a result, the stock’s jumped 21% this year.
• Google CEO Eric Schmidt doesn’t think we’re headed for recession. People have asked if the tech sector is “recession-proof” (no, it isn’t), but Google has fared pretty damn well in recent weeks. A good deal of large businesses are not as worried about the economy’s condition as they see positive signs come to light.

Overall, consumers are more pessimistic than businesses over the economy’s condition. That’s why consumers have tightened spending. But certain companies and markets are winners and losers. Internet advertising is a winner (it better targets consumers for cheaper), while traditional print and television advertising is more likely to lose. Wal-Mart and discount chains are winners, while moderate and high-end stores are more likely to be losers. The question is how long consumers will spend frugally and by how much will they change their lifestyle.

Spread the Word! Share This Post:

Filed under news roundup