Change in Spending Attitudes in the United States

[Raeph]

Was reading some business articles and came across a new Gallup poll with some interesting implications: http://www.gallup.com/poll/166172/en...up%20Headlines

Apparently attitudes for saving and spending are shifting and have shifted since the recession a few years ago, with saving now the preference by a much larger margin than before, as well as activities on behalf of the populace to reduce their own debt load significantly.

To quote: "These results come from a Dec. 3-4 Gallup poll. Its findings reinforce the psychological effects the financial crisis and the deep recession have had on Americans. Americans' newfound enjoyment of saving corresponds with a reduction in overall household debt. In early 2009, even as the percentage who preferred saving money had risen to nearly six in 10, household debt as a percentage of GDP hovered around 98%. During the past five years, with the preference for saving continuing at this higher level, household debt has fallen to 81%, according to data from the Federal Reserve."

I checked my own household debt to GDP and it is about 29%, and has actually fallen about 8% or so, when I paid off my car a few years ago, within the time frame of this poll. (check yours with http://www.bankrate.com/calculators/...alculator.aspx)

This seems to indicate that there is another reason why the economy is staying at a depressed state, compared to past recessions, longer: the consumer seems lead to reduce their debt load rather than to take on additional debt or at least maintain their same percentage debt load from the 2008-2009 years.

I wonder how long this will continue, with debt reduction and savings being such a high focus of the American consumer, and what the longer term implications of this will be. There may be tons of money being made on Wall Street and the banks and large business making a lot of money, however if the individual household with $50-100 extra in the budget a month, decides to pay off the credit card a bit more, rather than going out to eat or doing something else, or if they don't even have that $50-100 extra, that may mean that we are living in a new constant, where households are doing enough to get by and making only necessary purchases, without taking on new debt, and larger corporations are making money, less on consumer activity, but on perception and money games.

With the two divergent sides of the economy spread so far on their acceptance of risk (individual house holds = low risk, banks and large business = high risk) it makes me worry about the next recession to hit us, because some idiot on wall street screws up a stock sale and crashes the economy, despite the risk aversion of the average consumer.

Eh, something to think about.

[Ayla]

The problem here is that attitudes are shifting. People know jobs are scarce and people can't afford to buy homes anymore. When people don't feel secure, they should take care of debts first. When I know money is coming, I spend more. When i know its not/im unsure, I don't spend.

Think of it this way. I have a mortgage I'm $750,000 in debt, whats a tiny bit more?
I owe 1,000 dollars on my credit card, I should probably pay that off.

Go big, or go home when it comes to debt. Who cares about debt when you have everything you want you make your minimum payments. Those who pay off their cards, probably don't own homes/have nice cars and think they never will

[Deleted]

Go big, or go home when it comes to debt. Who cares about debt when you have everything you want you make your minimum payments. Those who pay off their cards, probably don't own homes/have nice cars and think they never will

Yea but I think the problem is that everyone wants to buy their own house or apartment and most people don't pass it on to their children and collect wealth like that. I think it's pretty stupid. Like your parents sell their house, move to smaller one when the kids grow up who in turn have to buy their own and spend half their lives paying mortgage. This just seems like a huge waste and only serves to keep all those real estate businesses and banks alive.

[Ayla]

Yea but I think the problem is that everyone wants to buy their own house or apartment and most people don't pass it on to their children and collect wealth like that. I think it's pretty stupid. Like your parents sell their house, move to smaller one when the kids grow up who in turn have to buy their own and spend half their lives paying mortgage. This just seems like a huge waste and only serves to keep all those real estate businesses and banks alive.

My mother will sell her home soon, because its too big for her (lol, 2 bedrooms, 1 floor). She plans on spending that extra cash on trips to europe for herself. One trip a year or so. My father is losing thousands trying to play the market (Mind you, hes trying to win big for me). I don't think I will have any inheritance.

[Jayburner]

I am poor and still live beyond my means... what is this saving thing you speak of?

[drwelfare]

I currently have no debt and save as much as I can. I cut out spending money of excess things like most entertainment, eating out, needless driving, nicer things I dont really need. Even if I do go somewhere and get a meal I look for something cheap and drink a water. Times are just harder now than they were 5 years ago.

Things are too risky for taking out a large loan for something like a house.

[Wilian]

People are not taking as much debt as they should?! How dare they!

[Zannis]

We're a country in decline. Not surprising that people are hunkering down for rough times ahead.

[Slant]

Glad to hear it, actually. Those banks trying to lure in people with outrageous deals need to die.

[Pitkanen]

People should pay down their debt.
People should spend money to stimulate the economy.
The middle class can't do both at the same time when wages are dropping for them, in favor of stockholder/CEO earnings.

It's why economists worry so much about wealth inequality.

[Aeluron Lightsong]

People are not taking as much debt as they should?! How dare they!

Yeah HOW DARE PEOPLE BE SMART WITH THEIR CASH! TRAITORS I SAY!!

[Sky High]

the problem is the back bone of our consumer based economy is being gutted by the day. spending habits do have to change, but that's not the ONLY thing that needs to happen.

[Chirri]

Once their debt is gone, then what? Saving more, sure, but seriously - then what?

They might start spending again. Just not quite to the pathetic and ridiculous extent companies convinced them they ought to go, previously. There are very, very few people who get out of serious debt who then turn around and become penny pinching millionaires. We know how it works, we know how we could do it if we wanted to (generally), we simply choose not to do it.

Who the fuck relies on the stupidity or extremely poor luck of others for personal profit, then turns around and tries to shame those same people for not supporting the companies profiting from debt? It's a fucked up "game" for some people.

Profit from offering a desirable product or resource, not from scamming people into screwing their lives up.

Or perhaps I'm not understanding the direction this was going in.

[Wilian]

Yeah HOW DARE PEOPLE BE SMART WITH THEIR CASH! TRAITORS I SAY!!

Yes. Say this with me. "SPEND! BUY! SPEND! BUY! CONSUME! NO MONEY? WE HAVE PAYMENT PLANS! SPEND! BUY! SPEND! CONSUME!" else be branded enemy of Freedom, Democracy and Capitalism, forever a... Communist..

[The Handsome Stranger]

People should start saving every penny extra they have.

Seriously, if you pay the minimum on your credit cards, you'll never make any headway. Its nice having cash in the bank for rainy days, like losing a job. I wouldn't own a house in this economy either, its better to rent than own because of taxes.

Get rid of credit cards or only use them for emergencies like card repairs, doctor/dentist, stuff like that. The faster you live without them the better you will be.

[Wells]

I wouldn't own a house in this economy either, its better to rent than own because of taxes.

Because of what taxes.

[Dakia]

Always pay yourself first. That is my primary rule when it comes to money.

- - - Updated - - -

Because of what taxes.

Likely property taxes. They keep getting raised.

[The Handsome Stranger]

Because of what taxes.

Where I live, incredibly high property taxes.

[Wells]

Property taxes get baked back into rent costs. The property company doesn't just eat that. If you're purchasing a home at least you're getting something. You have an investment where as the person renting doesn't have anything to show for it at the end of the month.

[The Handsome Stranger]

Property taxes get baked back into rent costs. The property company doesn't just eat that. If you're purchasing a home at least you're getting something. You have an investment where as the person renting doesn't have anything to show for it at the end of the month.

800 bucks for rent compared to 1k for mortgage and another 600 for taxes?

Renting is substantially cheaper for this economy, not the best investment, but some people can't afford 1.6k a month.