Consumers still wary going into 2012

The Harris Poll has made its annual beginning-of-the-year assessment of the financial plans and sentiments of Americans, and it finds continued uneasiness. This is despite a recent spate of confidence polls that show at least mild improvement. However, a bright spot in the study is the finding that fewer consumers will be looking to decrease their household spending than last year.

The most general result concerned overall expectations for the economy in 2012. Almost half expect things to remain about the same – 47%, to be exact. Pessimists unfortunately outnumber optimists by a 29%-23% margin.

Looked at by age demographic, the older respondents were the most pessimistic. The mature 66+ crowd actually managed to be the most optimistic AND the most pessimistic. The chart below tells the tale. As a point of age reference, Echo Boomers are 18-34, Gen-Xers are 35-46, Boomers are 47-65 and Matures are 66+.

Expectations Echo GenX Boomer Mature Total
Improve 23 22 23 28 23
Stay the same 55 51 42 38 47
Get worse 22 27 35 34 29
Source: The Harris Poll

One thing is clear from the survey – the economic collapse experienced in 2008 has had a lasting impact on consumer money-handling habits. Gone are the days when revolving credit accounts and home refinancing kept stock moving off of American retail shelves and out of American warehouses. Consumers are still more apt to pay off rather than incur debt, and accumulating savings is much more top-of-mind than it was before the fall of 2008.

“There has been plenty of reporting on Americans’ financial concerns for the past several years,” commented THP as it scanned the downward trends. “However, looking at Americans’ current expectations for both their own finances as well as for the state of the nation, it seems that the bad news may not be over yet.”

The number we particularly like to see in the latest Harris survey is 45% — that is the percentage of respondents looking to cut overall household spending in 2012. We’d like to see it much lower, but it still beats the 49% of thrift-oriented respondents from the 2010 survey and is much better than the 55% in 2009.
The percentage of respondents looking to pay down debt, invest more in savings, cut up a credit card (or two or three), sock money away for retirement and invest in home improvement have all been trending down over the three year period.

Harris did note that the decrease in houses looking to cut expenses was a positive sign.

Here are the three year trends in a number of fiscal categories:

Fiscal action 2009% 2010% 2011%
Cut household spending 55 49 45
Pay down debt 45 41 39
Save more 42 40 36
Drop credit card(s) 24 22 16
Save for retirement 21 22 16
Home improvements 14 13 11
Invest more safely 9 8 5
Refinance mortgage 5 6 5
Open home equity credit 2 2 1
Other 6 6 5
Nothing different 16 18 23
Source: The Harris Poll

The 2011 results from the chart above were also provided by age demo. It should not come as a surprise that the Mature group results can almost be tossed – if members of this group have not made a few investments into retirement by now, for example, there isn’t a whole lot of time left to catch up – and indeed, very few cited this as a 2012 priority, and in almost all categories, they were far below the national average.

The middle two groups are more likely to cut spending and eliminate debt, while the younger set is more interested in filling up savings accounts. Here are the full results:

Fiscal action Echo GenX Boomer Mature
Cut household spending 42 49 49 38
Pay down debt 35 49 44 24
Save more 47 38 34 18
Drop credit card(s) 13 16 21 12
Save for retirement 15 18 21 5
Home improvements 8 9 15 9
Invest more safely 4 7 6 4
Refinance mortgage 3 9 4 2
Open home equity credit 0 1 1 1
Other 6 5 4 2
Nothing different 21 17 21 39
Source: The Harris Poll

Harris summed up its results, saying, “Americans continue to face difficult economic times and the New Year may not provide a totally clean slate financially, but there are some bright spots when Americans discuss their expectations. Fewer U.S. adults now say that they will cut back their household spending in the year ahead. This is positive news for the millions who rely on the retail, dining and entertainment industries, and may be small sign that Americans are ready to move on from the harsh times of the past several years.”

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