Business: Consumers in a Squeeze

Still spending, but also cutting fun, frills and other nonessentials

Before I'll pay what they want me to I'll just live without it, 'Cause I'll never doubt, You can't ration nothing I ain't done without.

So go the lyrics of a new country-and-western ditty that has come out of Atlanta and was written by Georgia's Lieutenant Governor Zell Miller. Miller's lament may never make the Top Forty, but a great many of his countrymen surely share his gloom about having to "do without." As in past times of leaping prices and deepening economic slump, Americans are taking seriously the task of cutting back their household budgets.

Typically, the first question is what necessities are really necessary. Even in a pinch, most Americans are reluctant to cut expenditures for such practical aspects of their lives as tuition, rent, utility bills and essential or even vacation travel. In consequence, they start out by trimming what economists call discretionary spending: buying things that are fun, frills or otherwise not absolutely essential to daily life and work.

Such cutting seems to become more imperative each month. The Government reported last week that consumer prices rose 1% in July, which is an annual rate of 13.1%, and thus extended the present stretch of double-digit inflation to a full seven months. At the same time, the spending power of Americans has continued to decline. Mostly because of inflation, but also because taxes have been creeping upward, the actual buying power that people have been getting from the money in their paychecks has declined by nearly 4% over the past twelve months. So more and more, almost as a matter of survival, discretionary spending is being cut back.

Compared with past downturns, some of the current cutting is following unusual patterns. In previous recessions, forms of entertainment and diversion such as books, records and movies flourished during hard times because they were relatively inexpensive. But they are no longer so cheap, and therefore no longer recession-proof.

With the average novel costing close to $10 and other books priced at $15 to $18 or more, hard-cover sales are down by nearly 10% compared with last year; even "quality" paperbacks selling in the $4 range are gathering dust on publishers' bookshelves.

Sales of records, meanwhile, are off even more sharply. Some stores are reporting sales declines of as much as 40% this year; with albums now costing $9 or more, many music buffs have stopped buying, or have discovered that they can save money by tape-recording their friends' records.

Some signs of rebellion over climbing movie-ticket prices are also appearing. When some of Atlanta's first-run theaters raised the cost of admission from $3.50 to $3.75 this summer (it has risen in New York City to as high as $5 for some movies), smaller houses in more remote shopping centers began drawing sizable crowds by cutting prices to as low as 99¢ for recent but hardly fresh offerings like Rocky II.