In days of long ago, before the Internet and when you had to put a quarter into an outdoor phone if you wanted to call home, there was something called layaway.

In those quaint days, when families couldn’t afford an item or product, they simply wouldn’t buy it, or if they thought it was possible, they would put it on layaway. It was a simple concept. A shopper would put a little down on an item because he or she couldn’t afford to pay for the whole thing in one shot. Then, by putting down regular payments over a limited period of time, a Mom or Dad could get that bicycle for Juanito or Gabriela, or maybe some clothes for the kids with school starting up again.

My folks bought lots of thing on layaway. I remember trailing along behind my mother when she would make layaway payments, and then she would tell me how much longer she had to go before the item in question would be making its way home. I am a son of the layaway era, but I’ve never actually bought anything on layaway.

I hadn’t even thought of layaway in years. It was like some extinct species that had vanished from the American frontier, as it was readily replaced by credit cards and the incredible ease with which people were willing to go into deep debt. Then, to my amazement, I began reading recently about how many major retailers are bringing layaway back, a truly stunning development that demonstrates just how intoxicated Americans became with spending beyond their means.

That overspending intoxication is being seen in the rapid deterioration of the American economy of recent months. This downturn is largely the result of spending too much on too many things. The bubble is bursting. Too many banks gave too many mortgages to families who couldn’t afford the payments, which was multiplied by complicated and greedy schemes created by investors on Wall Street to tap into this feeding frenzy with their securities and hedge funds.

It’s all tumbling down now. The credit crunch, the impending collapse of the U.S. automotive industry, with  American consumers spooked by the whole thing in going old school in their retreat from the buy now, pay later society of the last 25 years. A New York Times  story last week said it best with this headline: “Buying Binge Slams To Halt.”

Sales of new vehicles are down 32 percent. Consumer spending appears likely to fall in 2009 when compared to previous year, the first time since 1980 that such a thing could happen - and that drop may represent the steepest decline since 1942.

“The American consumer,” the Times article says, “long the spender of last resort for the global economy, may finally be spent.”

In the layaway generation I grew up in - roughly from the 1950s through the 1980s - Americans spent about 91 percent of their income, on average, and saved the rest, says the Times article referred to above. From the 1990s on, however, Americans spent close to 99 percent of their income, saving only about 1 percent.

This pattern could not continue forever. With the pillars of the U.S. economy now swaying , many Americans are in spending retreat, paying down their debts and trying to replenish their diminshed savings accounts. Hence, the return of layaway from the era of Elvis and Eisenhower. Layaway goes back to the Great Depression when retaliers and merchants gave their customers a chance to purchase items they otherwise wouldn’t be able to afford.

It’s hard to fathom now, but before the 1980s, only upper-income Americans had credit cards. So, most Americans either saved up enough money to buy something, or put it on layaway. When credit cards began to be given away like candy, and the rise of deep discounters like Wal-Mart offered products at cheaper prices, the era of layaway came to an end.

Now it’s back to the future, at least for now, with retailers such as Kmart, Burlington Coat Factory and TJ Maxx bringing the old dinosaur back. Unlike credit cards, layaway programs charge no interest and require no credit history, but you can’t take the stuff home until it’s payed for in full. The common sense vibe with its roots in the World War II generation makes a comeback, as fleeting as that may turn out to be before charging on plastic makes its ultimate comeback.

The upheavals of the sort we are now seeing are huge economic adjustments as the market gets its bearings back, with inefficient and badly run companies and industries croaking in the process unless the federal government bails them out. The buying binge is grinding to a relative halt. The return of layaway is like the canary in a coal mine. There’s trouble up ahead. It’s better to buy what you can afford - not what you wish for - just like the layaway generation used to do before plastic cards filled our wallets and purses.

- R.D. Cavazos

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