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New Poll Shows that Americans Are Spending Less

Nancy Trejos

Americans are optimistic that the economy — and their personal finances — will improve in a year, but that’s not keeping them from clamping down on their spending.

In a new survey by the Pew Research Center for the People & the Press, 48 percent of Americans said they expect economic conditions to be better in a year, up from 40 percent in February. The percentage who said they think their personal finances would improve grew from 54 to 63 percent in that time period.

Nonetheless, 76 percent said they have cut back on vacation spending and eating at restaurants or have delayed buying a car or major home items. The survey was conducted June 10 to 14 among 1,502 adults reached on their landlines and cell phones.

What’s driving the new spending habits? Fear.

Half of the respondents said they cut back their spending out of fear about their future, while 36 percent said it had to do with their finances actually getting worse.

It’s not suprising to Matt Wallaert, lead scientist for financial Web site, who studies people’s spending behavior.

“There’s an interesting disconnect between what people say and do. We need for our emotional well-being to believe things will get better but we still act in a way that is practical and self-protective,” he said.

But he sees another driving force behind America’s new frugality: peer pressure. Gone are the days when you could show off the expensive items you bought impulsively. Frugality is “in” right now.

“We would think badly of you if you just spent sort of with no heed in the world,” he said. “We want you to be conscious in the world as your friends and as your family members.”

Are you too spending less these days? If so, what’s driving your new frugality?

By Nancy Trejos  |  June 22, 2009; 7:00 AM ET
Categories:  Nancy Trejos  
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I don't think it is honestly fear that is causing people to spend less. I think it is the facing the reality that many people had been spending money they didn't have, and waking up to reality. I am thankful that we are waking up and actually thinking about our financial decisions lately. We owe it to ourselves and our families -- now if our government would catch on, we'd be in better shape, but it does not appear that they are facing reality yet. In the future we are going to pay for their spending decisions, since they are not thinking things through.

Posted by: rjrjj | June 22, 2009 12:00 PM | Report abuse

We've probably spent a little more than usual. Part of it is necessity -- things like kids outgrowing clothes, our 13-yr-old grill dying, I lost 25 lbs and now need new clothes, etc. Part of it is that there are really good deals out there. And part of it is that I know some of my favorite places are hurting; we're doing ok so far (my 5% pay cut seems like nothing compared to what other folks are going through), so I feel like I need to make a point to support the places that I value. That said, my baseline spending is fairly small -- for me, my 3 pairs of new pants over the past 4 months is a veritable shopping spree. :-)

I am not that optimistic about the future. I do think/hope the economy will be better off in another year. But I don't expect to be better off personally -- my industry is a "trailing" industry that will probably not pick up again for another year or so, and my husband is in an industry that will get cut back once the bill comes due on all of the current government spending.

So on the flip side of the spending we are doing, we are also actively looking for ways to sock away more cash. I.e., for the past few years, we've always talked about upping our automatic monthly withdrawals to savings once FICA maxed out. This year, we're actually doing it. And in the past, that money would have gone to long-term investments (retirement, college fund, etc); this year, because we're worried about the next couple of years, that money is going to go to a money market for ready cash.

I don't know how to reconcile those two things -- I do feel like I'm spending more, but I know I'm also saving more. Maybe it just feels like I'm spending more, because (a) I'm more conscious of it/unsure about the future, and (b) with the great deals out there, I'm getting more stuff for the same amount of money. I am also focusing my spending more where I feel like I get value. One of my annoyances was how we used to end up dropping $50 for 4 at some generic chain restaurant where you didn't even remember what you had the next day, just because I didn't feel like cooking, or we were out doing errands and it was there, etc. Now my "laziness" default is $ 15 at the local deli or Chick-fil-A with the kids (with food we actually like better). And because that costs less, we can still go out occasionally for a $100 grown-up dinner at a nice restaurant.

Posted by: laura33 | June 22, 2009 1:59 PM | Report abuse

Absolutely spending less. Looking for the cheaper champagnes instead of always the Moet Chandon. Using the house vodka instead of insisting on Grey Goose. Having the first few drinks at home, to cut down on bar time. Less entertaining at home (that gets expensive!). And maybe not treating people like in the past -- letting everyone split the bill.

Why? Good question, since, really, my salary is the same as it was last year, and there's no immediate (knock on wood) prospect of a layoff.

But it's psychological. First, when you see others around you spending less -- perhaps because they have seen a decline in their finances, or because a spouse is suddenly unemployed -- then you start to feel guilty about excess and want to cut back too. Second, when you hear of friends being laid off, it makes you worry about your own future, even if you know it is not likely you will be laid off. You can't help it -- fear is contagious.

And, perhaps most importantly, a few years ago you simply FELT richer, when you saw your 401-K or your stock portfolio hitting stratospheric levels. You weren't too worried about anything because you had that huge cushion of your retirement savings or stock. But now when you see that number 40 percent down from a year ago, you feel like you"ve taken a huge financial hit, even if, as I said, your salary is the exact same as before.

What do others out there think?

Posted by: richburgk | June 22, 2009 3:06 PM | Report abuse

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