Americans Cutting Back on Spending as Incomes Remain Stagnant
According to the latest American Pulse Survey by BIGresearch, 89.9% of those who currently have a job say they are not counting on a salary increase next year to compensate for the rising cost of goods. In addition, confidence in economic policy to get the economy back on track has been declining, and most are worried the U.S. could slip into another recession.
Consumers are struggling with high fuel prices and the rising cost of goods while incomes will likely remain unchanged. Only 10.1% think they will see a pay increase while the rest are planning to have less disposable income. Only 6.6% are not planning to make any changes to their spending habits.
In order to prepare for higher prices and stagnant incomes, 70.5% of Americans are planning to buy just the necessities. Driving less and spending less on clothing are also popular penny-pinching activities:
|Preparing for Rising Food/Gas Prices If Salary Stays the Same|
|PlannedChange||% of Respondents|
|Only buying necessities||70.5%|
|Spending less on clothing||58.9%|
|Sticking to a strict budget||50.0%|
|Buying more store brand/generic products:||9.9%|
|Spending less on groceries||42.0%|
|Source: American Pulse Survey, June-2011|
75.7% of Americans have little or no confidence that the government’s economic policies will get the economy back on track, though 24.3% say they are confident or very confident. Confidence was at its lowest in March (21.5%), and has been steadily declining since June 2010 (31.2%).
While 68.6% of American consumers are somewhat/very worried that the U.S. government will slip into another recession this year, says the study, 11.8% are not very or not at all worried, and 19.6% are unsure.
According to a new Gallup poll, the significant majority of Americans consistently report that they are cutting back on the amount they are spending each week. This may represent a “new normal” says the report, in which Americans are adjusting to a less robust economy, or a more basic element of human psychology that manifests itself in a need to present oneself as frugal.
Even higher-income Americans are less likely to say they are cutting back on spending than are those who have lower incomes. Still, almost half of those making $240,000 a year or more say they are cutting back.
|Currently Cutting Back on Weekly Expenditures|
|Annual Income||% of Respondents|
|Source: Gallup Daily Tracking, 9/2010-May/2011|