The mutual fund industry got a swift dose of the new reality of investors' conservative sentiment recently when PIMCO released a survey showing that 401(k) consultants are focusing on cash-equivalent and target-date funds.

Now economists are debating whether “the new frugality” will outlast the recession, and the consensus is that it will, at least for the next 10 years.

“It’s hard to believe we’re ever going back to the easy credit and free spending of the last 10 years,” Richard Berner, an economist with Morgan Stanley, told The Wall Street Journal. He foresees consumer spending growing a scant 2% to 2.5% a year over the next decade, compared with 3.5% over the past 10 years.

If mutual fund companies can convince consumers to set some of that money aside for their retirement, of course, that is good news. But currently, many investors have moved their cash to money market funds and bank deposits, and a growing majority of Americans are working assiduously to pare down their debt.

Credit card Discover found in a survey that 35% of Americans intend to reduce their debt over the next six months, and one-third said that the extra money they will have as a result of lower payments is going into savings.

Many economists note that it will take Americans a while to recover from the $13 trillion loss of wealth since the recession began. And if it gets worse, people’s outlook toward money, saving, retirement and consumer spending will be tamped down further, said Ravi Dhar, director of the center for consumer insights at Yale.

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