Some 85% of US consumers say they believe the country is in a recession and US consumer confidence in the economy plunged 17 points from the second half of 2007 to the first half of 2008, according to a new online survey by The Nielsen Company.
Not surprisingly, 35% of US consumers consider the economy their biggest concern over the next six months. Debt comes in a distant second place at 15%, followed by work/life balance (8%):
International affairs, such as war and terrorism, rank near the bottom of the list (2% and 3%, respectively). Even immigration, a hot-button political issue, is only cited by 2% of respondents.
Overall, Americans’ view of the economy is bleak: 66% of US respondents have a pessimistic view of their local job prospects over the next 12 months, with 50% saying it’s not so good, and 16% calling it downright bad. Just 3% consider it excellent.
Looking for the Silver Lining
So far, this negative view of the US economy appears not to have tainted most Americans’ views of their own financial affairs: More than half (51%) say the state of their personal finances remains excellent or good, while just over one-third (36%) rank their situation as not so good.
Should the economy take a turn for the worse, inflation tops US consumers’ concerns (62%), followed by unemployment (50%), falling property prices (25%), and interest rate increases (21%):
Managing Extra Cash
While government officials are hopeful this spring’s tax rebate checks will stimulate the economy, consumers appear to view any potential windfall more as a means of digging out of debt than for splurging on goods; some 69% say the next 12 months are either a bad or not-so-good time to buy things they want or need.
Once they’ve covered essential living expenses, here’s how they spend any spare cash:
- 41% pay off debt, credit cards, or loans.
- More than one-third (36%) play it safe, putting extra funds into savings.
- Nearly a quarter of consumers (24%) report having no spare cash.
- Just 21% use such money for home improvements/decorating.
- 19% opt for out-of-home entertainment or holidays/vacations.
- Shopping sprees rank low on their list of priorities, with 17% buying new clothes and 10% splurging on new technology.
- Few respondents have their eye on the future – just 11% put extra money into a retirement fund, while 9% invest in shares of stock/mutual funds.
“With high gas prices, food inflation and other economic pressures, it’s not a surprise that the economy is a top concern for many Americans,” said David Parma, global head of Customized Research, The Nielsen Company. “Consumers have many reasons to feel pessimistic right now and even if we’re not officially in a recession, consumers certainly feel like we’re in one.”
“These findings are really telling in that consumers are clearly feeling gun-shy when it comes to spending or investing,” said Parma. “While it’s definitely a good move for consumers to pay off their personal debt, it will likely do little to jumpstart the economy.”
About the data: The Nielsen Global Online Consumer Survey, conducted by Nielsen Customized Research, was conducted in April 2008 among 28,153 internet users – including 1,000 US consumers – in 51 markets from Europe, Asia Pacific, North America and the Middle East.