New Citi Survey Finds Majority of Americans Have Cut Back on Everyday Expenses; Nearly Half Only Shopping For What They Absolutely Need

NEW YORK--(BUSINESS WIRE)--A new nationwide survey issued today by Citi revealed that American consumers, increasingly uncomfortable with their levels of debt and savings, are changing their overall shopping habits and planning to decrease discretionary spending over the next six months, including dining out, clothing, vacations, home appliances, home and personal electronics, automobiles and real estate.

“Despite the fairly dramatic cuts consumers have already made in their spending, it looks like consumers may continue to keep spending restrained for the next six months”

The survey, conducted by Hart Research Associates, found that over the past three months, the percentage of Americans who are uncomfortable with their level of debt has increased, to 38 percent, up five points since June. The percentage of Americans who say they are somewhat or very uncomfortable with their savings level is now at 52 percent, an increase of three points since June. This is the first time since September 2009 in this series of surveys that a majority of consumers have expressed discomfort with their level of savings.

Consumers’ growing unease is reflected in their saving and spending habits, with many Americans indicating that they are finding ways to cut back spending now or indicating they will do so in the future.

Nearly half (49 percent) of Americans report they either avoid shopping altogether or shop only for those things that are absolutely needed. 31 percent report shopping for necessities with an occasional splurge. Fewer than one in five (19 percent) Americans are able to shop for both the things they need and the things they want.
Nearly three in four Americans (72 percent) say they have cut back on everyday expenses.
Saving tips: When asked for the most creative or successful ways consumers have found to save money, many report cutting everyday expenses by packing their lunch, carpooling, cutting down on gas and electricity use, and growing their own food.

“Despite indications that the economy is modestly improving, a majority of Americans don’t seem to feel it and aren’t acting like we’re in an economic recovery,” said Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management. ”Reducing debt and increasing savings are positive changes for individual consumers and reflect a healthy desire to live within one’s means. But there’s a downside: A decline in overall spending could likely further slow the economic recovery.”

Americans Expect to Cut Spending on Entertainment, Home Improvements, Vacations, Clothing

According to the Citi survey, Americans are postponing major purchases and, as they continue to weather the economic downturn, are cutting back on everyday expenses and entertainment spending.

66 percent believe it is only a fair (28 percent) or poor (38 percent) time to make a major purchase, such as furniture, a refrigerator, a car or television, up four points since June.
70 percent report cutting back on entertainment spending; and 66 percent have cut back on credit card purchases.
More than one in three (36 percent) Americans are eliminating or reducing mobile phone costs and 34 percent are eliminating or reducing pay, cable, or satellite television service.
Over the next six months:
- 59 percent of Americans are planning to decrease spending on eating out.
- 51 percent plan to decrease the amount they spend on clothing.
- 50 percent plan to decrease the amount they spend on vacations.
- 44 percent plan to decrease the amount they spend on home appliances; 44 percent for home and personal electronics; 42 percent for automobiles; and 35 percent for real estate.

“Despite the fairly dramatic cuts consumers have already made in their spending, it looks like consumers may continue to keep spending restrained for the next six months,” added Clements. “We’ve got 51 percent of Americans saying that the changes they’ve made to their spending and saving habits are permanent. If that happens, it could mark a fundamental shift in the mindset and behavior of the American consumer.”

Americans Are Looking to National and Local Evidence of Job Creation to Signal Recovery

When it comes to indications of economic recovery, the survey revealed that Americans are waiting for changes in the national and local employment statistics to signal that the downturn’s end is near.

When asked what signs would indicate economic improvement, more than one in three Americans (36 percent) said a decrease in the national unemployment rate while one in four (25 percent) said more help wanted notices and jobs in their area. 23 percent will watch for more people they know getting the jobs they want.

“Your human capital, your ability to pull in a paycheck, is often your most valuable asset,” noted Clements. “Until consumers feel there is a turnaround in the employment picture, they will likely continue to be extremely wary. The unemployment rate may be below 10% but the resulting economic anxiety seems to be afflicting a majority of Americans.”

Citi conducted this nationwide survey as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.

Survey Methodology

Hart Research Associates conducted the telephone survey of 2,001 adults nationally from September 14-19, 2010. The Random Digit Dialed (RDD) survey has an overall statistical margin of sampling error of plus or minus 2.19 percentage points. The survey also included a sample of respondents who use only a mobile telephone.

About Citi

Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.