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Can't say anything about buying new clothes, but as the budget's tightened in my household I've been leaning how to mend my clothes. The ones I normally would've thrown away due to armpit/toe/crotch holes can be fixed somewhat easily.
One catch is that I use a sewing machine my MIL gave me - so there was some cost somewhere. But I see machines on craigslist going for sub 60 fairly often. The second catch is that I was lucky enough to develop an interest (and spend my free time) learning about how to mend clothes. If people lack free time/interest to learn how to do it, then they end up paying the new-clothes tax.
My wife does the sewing machine work here. I'm inept. But I'm okay with a needle and thread, so I've done plenty of my own (ugly) repairs. Some stuff it doesn't matter on anyway, like fixing the toe in a sock. Easy to do and saves money on socks.