No Raise In Sight; Belt Tightening To Change Spending Habits

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%

Driving less

63.4%

Spending less on clothing

58.9%

Comparison shopping

53.1%

Sticking to a strict budget

50.0%

Buying more store brand/generic products:

9.9%

Spending less on groceries

42.0%

Nothing

6.6%

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.

The Federal Reserve has suggested printing money to help get the economy back on track, but among Americans:

  • 61.0% say flooding the market with new bills will hurt the economy in the long run
  • 21% aren't sure
  • 18.0% think creating more currency will boost the economy

44.2% of adults 18+ agree with John Boehner's policy that would match any increases to the debt ceiling with equal spending cuts:

  • 21.7% disagree and
  • 34.1% are neutral.

In order to balance the budget, Americans are willing to make cuts to:

  • Public workers' salaries and benefits (49.0%)
  • Welfare programs (38.9%)
  • Military spending (33.8%)

And, 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

< $6,000

75%

$6-<12K

73

12-<24

76

24-<36

74

36-<48

68

48-<60

66

60-<90

62

90-<120

57

120-<240

54

240+

48

Source: Gallup Daily Tracking, 9/2010-May/2011

To learn more about the Survey, please visit here. Or, from Gallup, go here.

  

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1 comment about "No Raise In Sight; Belt Tightening To Change Spending Habits".
  1. Paula Lynn from Who Else Unlimited , June 21, 2011 at 1:33 p.m.

    This does not show that the public understands economics and what the ramifications of generalities would really do. It's extremely complicated. Yet, how many people are still buying cars by answering the salesperson's question of how much do you want to spend monthly?