A Generational New Frugality?

I have written about the economic headwinds faced by the Atlas generation before. Now David Rosenberg (free registration required) has highlighted a New York Times op-ed by Norihiro Kato on the emergence of a Generational New Frugality in Japan entitled Japan and the art of shrugging:

Three years ago, I saw a television program about a new breed of youngster: the nonconsumer. Japanese in their late teens and early 20s, it said, did not have cars. They didn’t drink alcohol. They didn’t spend Christmas Eve with their boyfriends or girlfriends at fancy hotels downtown the way earlier generations did. I have taught many students who fit this mold. They work hard at part-time jobs, spend hours at McDonald’s sipping cheap coffee, eat fast food lunches at Yoshinoya. They save their money for the future.

These are the Japanese who came of age after the bubble, never having known Japan as a flourishing economy. They are accustomed to being frugal. Today’s youths, living in a society older than any in the world, are the first since the late 19th century to feel so uneasy about the future.

I saw young Japanese in Paris, of course, vacationing or studying, but statistics show that they don’t travel the way we used to. Perhaps it’s a reaction against their globalizing elders who are still zealously pushing English-language education and overseas employment. Young people have grown less interested in studying foreign languages. They seem not to feel the urge to grow outward. Look, they say, Japan is a small country. And we’re O.K. with small.

It is, perhaps, a sort of maturity.

It is interesting that this form of youthful New Frugality can be observed in Canada as well. A recent Scotiabank study indicated that the young Canadians are saving more:

While building a nest egg for emergencies is important to Canadians of all ages, the necessity of saving for a rainy day is most keenly felt by the younger generation (18-34) and they are just as likely to have a plan in place to achieve their savings goals as those in older age brackets, according to a recent Scotiabank study conducted by Harris/Decima to assess the saving patterns of Canadians.

They are also more prudent in their spending patterns:

The Scotiabank study also found that younger Canadians are the most prudent in financing their major purchases, with 38 per cent indicating they would prefer to save up and then pay for the whole thing compared to 28 per cent of those aged 35-44 and 27 per cent in the 45-54 and 55+ age groups.

The implications for consumer spending should this form of Generational New Frugality take hold and become the new zeitgeist are enormous. Unlike their elders, this Atlas generation will not be aspiring to the McMansions and other excesses of the last 10 or 20 years.

What will drive consumer spending and global growth then?