Recent data reveals that after decades of elevated spending, Americans are finally cutting back in order to save more. In the third quarter of 2008, U.S. consumer spending growth declined for the first time in 17 years, while U.S. household debt also declined for the first time since the Federal Reserve began tracking it in 1952.

Normally such figures would be heralded as good news, but not necessarily in a poor economy where thriftiness may only fuel a downturn. With increased saving comes decreased spending, which leads to a trickle down effect (i.e., store closings, job cutbacks, etc.) that further exacerbates the nation’s financial woes.

Dubbed the “paradox of thrift,” some economists believe spending will continue to decrease and lead to the biggest drop in the gross domestic product in a quarter-century. According to Elizabeth Warren, who is involved with overseeing the distribution of the government’s Troubled Asset Relief Program funds, “The idea that the American family will quickly spend us out of this recession is a fantasy. It won’t happen.”