Some 58% of Americans feel that the economy has reached a low point and nearly half (47%) think it will stay this way for a while, prompting spending cutbacks on nearly everything – from charitable contributions to dining out to beauty and grooming products, according to the November/December 2008 Insight Report from MarketTools, Inc.
The report, which focuses on US economic conditions and how they will affect spending in the coming months, foretells an economically turbulent holiday season and spending reductions for the longer term.
Holiday Spending Down
Though consumers will still be making some purchases, they will be scaling back on gift-buying and on other expenses specifically around the holiday season:
- 57% of all respondents will spend less on dining out than they did last year.
- 40% will do less away-from-home entertaining.
- 49% will travel less and 45% will vacation less.
- 37% say they will give less to charities.
Less Saving for Retirement
With the perception that gloomy economic times will outlast the holiday season, consumers are also feeling pressure in other areas. Some 43% of respondents indicate they are setting aside slightly less (15% ) or significantly less (28%) for retirement. The tendency to save significantly less is most prevalent among Baby Boomers (37%) followed by Generation X (31%). However, about one-third of Americans (34%) are continuing to save about the same amount for retirement. This trend is most common among Seniors (47%).
Green Products Stay on Store Shelves
The research also found that while environmentally friendly or “green” products have become increasingly available in stores in recent years, the economic downturn is affecting purchases of these more expensive options:
- Only 8% of Americans are such strongly committed buyers of green products that they will pay more for them despite the economy, while about half (47% ) of consumers are less likely to pay a premium for green products during tough economic times.
- Nearly four in ten consumers (38%) are not willing to pay a premium for green products regardless of the state of the economy.
- 68% of Americans buy green products at least occasionally and 18% of respondents opt for green choices either “most of the time” or “all of the time.”
- Generation Y is especially likely (22%) to buy green products most or all of the time.
Personal Spending Drops Further
Consumers are cutting back further on optional items for themselves and for their families, including dining out, toys and health and beauty aids:
- 71% of all respondents are reducing dining out costs today vs. 66% in the last survey in April 2008.
- 34% of households are cutting back on purchases of beauty or grooming products compared with 27% previously.
- 30% of households are reducing spending on kids’ toys and games, despite the holiday, compared with 25% of households in the last report.
- 19% of respondents are cutting back on purchasing non-prescription medications compared to 16% in the last survey.
“Although more than half of Americans are feeling impacted by the economy this holiday season, consumers will still be making purchases,” said Beth Rounds, SVP of research solutions at MarketTools. “This economic crisis will outlast the holiday season, so companies need to listen to their customers to understand how consumers are responding to budgetary pressures.”
About the research: MarketTools Insight Reports are regular reports of findings on topical, national issues of interest. Data is based on feedback from 1,000 online respondents in October 2008, drawn from ZoomPanel, MarketTools’ online sample source of more than 2.5 million individuals. Insight Report respondents are a nationally representative sampling of the US adult population, age 18+.