Monday, November 22, 2010

New Frugality Hurting Corporations Bottom Line

Organic Heinz Tomato Ketchup 2Image via Wikipedia

The recession has taken it's toll on American culture by making us think before we spend money. Never before, besides the financial devastation of the Great Depression, has America taken the time to really think about the money they spend. Money market accounts are awash with cash just sitting on the sidelines waiting for a better economy. Our friends and neighbors are thinking twice about spending their cash because they are worried what tomorrow will bring. Many people have sworn off the use of credit cards and are paying down their debt and vowing to never to borrow again. We are seeing a new frugality developing in our country.

Some of this frugality has already been a part of many peoples lives. But today it's on the rise. The money we spend and what we spend it on is affecting many businesses. The economy is reflecting this frugality in the bottom lines of business.

Ketchup maker H.J. Heinz has made some noise about how this new frugality has hurt it's bottom line. They state in a press release that this new found "funk" in spending has shaved a few pennies of their profit for the quarter. Don't feel sorry for them their profit for the last quarter was only $251.4  million dollars. To make it worse the company has complained that coupon use has increased by 5%.

This is the kind of news I love to read about. Proof that we are making good decisions with our money. It makes sense to the public, but executives at Heinz find themselves confused. Even with ketchup we are frugal.

In what other ways does frugality effect the economy? If ketchup frugality makes it to the news what other results are on the horizon. Will the increase in savings and the reduction in debt help or hurt the economy. I believe it will benefit and and help heal the economy. Deficits and limitless debt has proved to be a blessing so far, so let's try something else. What's your take? Will saving and frugality help save the economy?

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