Study: Economy Forces Americans to Change Spending Habits

Tuesday, 06 Sep 2011 12:07 PM

By Greg McDonald

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The nation’s economic crisis has changed how Americans think about and handle money, according to a report today in the Chicago Sun-Times.
 
The newspaper cited an Aug. 31 survey by Peter D. Hart Associates for Citibank that shows that 57 percent of Americans believe that the economic realities of the nation have changed forever. That’s up from 51 percent in the same survey conducted a year ago.

As a result, the newspaper said, even people who really don’t have to “are saving more, paying down mortgages, reducing credit card debt, moving to cheaper housing, and postponing retirement.”

“This underscores the increasing numbers of people who believe they have to take bigger, more long-term action,” Michelle Peluso, a consumer marketing and Internet officer for Citibank parent company Citigroup, told the Sun-Times.

Another thing that stands out is that Americans are now paying more with cash rather than relying on credit or debit cards, according Britt Beemer, president of American Research Group in Charleston, S.C.

Some 40 percent of people are doing it because they have no choice, Beemer told the newspaper, but others are increasingly doing it out of caution.

Citing federal government statistics, the newspaper noted that household savings today average about 5 percent of disposable income compared to 1.2 percent in 2005; household debt, meanwhile, has fallen to 115 percent of disposable income — mainly because of foreclosures — compared to 130 percent in 2007.

Credit card balances have also declined over the past three years and now account for 6 percent of all consumer debt.

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