Will "Frugal Fatigue" Save The Economy?

A single piece of economic data shouldn't be taken too seriously, of course. But the surprise announcement that the US economy shed a mere 11,000 jobs in November -- after endless months in which the rate was in the several hundred thousands -- may give consumer confidence just the boost it needs to improve upon the shaky but promising start of the holiday shopping season.

This year, retailers are counting on what NPD Group analyst Marshal Cohen calls "frugal fatigue": consumers are tired of saving money. That 2008's dismal holiday season occurred (of course) twelve months ago shows how long consumers have been holding back, saving money to either stretch budgets or in fears of layoffs.

Though the 10% of the work force who are now unemployed (a number that excludes those who've been out of work so long they've given up) is a huge number of people without money to spend, the economy is even more vulnerable when millions more fear they could be next. So even if it's months -- or longer -- before jobs start to come back in significant numbers, simply easing the unemployment fears of tens of millions more may be enough to convince those consumers that they've held back long enough on spending.

Of course, analysts throughout the long recession have identified to consumer spending as the pivotal factor that will allow businesses to expand and hire once again. (Hence, stimulus refunds from the US treasury intended to spur spending.) So consumers, no longer terrified that the money they spend at JC Penney or Amazon will cause them to miss a mortgage payment months hence, might provide the engine that turns the economy around between now and December 25.